On Tuesday the Reserve Bank is widely expected to keep the cash rate on hold at 0.25% once again. This is then predicted to be the same outcome for many meetings to come.
In light of this, it looks likely that low interest rates will be here for a few more years.
How can you beat them? The two ASX dividend shares listed below could be great ways to generate superior yields. Here’s why:
Coles Group Ltd (ASX: COL)
The first ASX dividend share to consider buying to beat low interest rates is Coles. I think the supermarket giant is perfectly positioned for long term growth thanks to its strong market position, defensive business, and expansion opportunities.
Another positive is the company’s focus on cost cutting and automation with its Refreshed Strategy. This should support its margins and ultimately its earnings and dividend growth over the coming years. For now, based on the current Coles share price, I estimate that it offers investors a fully franked ~3.2% FY 2021 dividend.
Rural Funds Group (ASX: RFF)
Another ASX dividend share I would buy is this agriculture-focused property group. It owns 61 properties across five agricultural sectors including almonds, cattle, cropping, vineyards, and macadamias. I’m a big fan of the company due to its defensive qualities and its long leases. At the end of FY 2020, the company’s weighted average lease expiry (WALE) was 10.9 years. It also has a high weighting towards blue chip tenancies, with 78% of revenue coming from corporate or listed tenants such as Treasury Wine Estates Ltd (ASX: TWE).
This allowed Rural Funds to continue its growth during the pandemic, with the company reporting an 8% increase in property revenue to $72 million. Looking ahead, management reaffirmed its plan to grow its distribution by 4% in FY 2021 and intends to pay shareholders 11.28 cents per share. Based on the current Rural Funds share price, this works out to be a 5% yield.
These 3 stocks could be the next big movers in 2020
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More reading
- Are ASX banks or miners buys for dividends?
- ASX 200 Weekly Wrap: Earnings drag ASX back to reality
- Will the RBA keep the cash rate on hold for 3 more years?
- ASX reporting season heroes to buy for FY21
- 3 quality ASX shares to add to your retirement portfolio
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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