If you’re looking for a way to beat the low interest rates on offer with term deposits, then the ASX dividend shares listed below could help you achieve this.
I believe both dividend shares are great options for income investors right now. Here’s why I would buy them:
Commonwealth Bank of Australia (ASX: CBA)
The first ASX dividend share I would buy is Commonwealth Bank. While I think all the big four banks are in the buy zone after recent pullbacks, my preference remains CBA. This is due to the quality of its operations and its strong management team. Another positive was its recent full year results which I felt were very robust given the difficult trading conditions. The bank also finished the period with a strong balance sheet, which appears to have left it well-placed to successfully ride out the current crisis.
While estimating what dividend the bank will pay next year is difficult given the pandemic and the potential for APRA to place restrictions on payments again, I would expect something in the region of $3.00 per share in FY 2021. Based on the Commonwealth Bank share price, this equates to a generous fully franked 4.2% yield.
National Storage REIT (ASX: NSR)
Another dividend share to consider buying right now is National Storage. I think this storage giant could be a good option for income investors due to its attractive valuation and generous yield. Although the company is inevitably going to be impacted by the pandemic, I don’t believe this impact will be as bad as many of its real estate peers.
In light of this, I’m optimistic National Storage will be able to continue paying a decent distribution during the crisis. After which, I believe it will then return to growing it modestly each year once trading conditions return to normal. Based on the current National Storage share price, I estimate that it offers a 4.4% FY 2021 distribution yield.
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More reading
- Fund managers have been selling these ASX shares
- Is the Commonwealth Bank share price a long-term buy?
- ASX shares to buy with $10,000 in August
- These were the highlights of ASX reporting season last week
- Take a look at last week’s worst performing ASX shares
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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