Later today the Reserve Bank will meet to discuss the cash rate.
According to the latest cash rate futures, the market is pricing in a 56% probability of a rate cut to zero.
While I’m not convinced there will be a rate cut today, that doesn’t necessarily mean I’m expecting a rate hike any time soon.
In fact, I think it could even be several years until the central bank lifts rates again. In light of this, I believe income investors should focus on ASX dividend shares for a source of income.
But which ones should you buy? I think these two dividend shares would be top options:
Dicker Data Ltd (ASX: DDR)
Dicker Data is a leading wholesale distributor of computer hardware and software in the ANZ region. It has been a very positive performer in FY 2020 and recently released a strong half year result. During the six months, Dicker Data reported an 18.1% increase in revenue to $1,006.1 million and a 23.6% lift in net profit after tax to $29.4 million.
Pleasingly, management expects demand to remain strong in the second half, which I expect to support a generous final dividend. Based on the current Dicker Data share price, I estimate that it offers a fully franked forward 4.75% dividend yield. The good news is that I don’t expect its growth to stop there. Looking further ahead, the construction of its new distribution centre is expected to expand operations and boost revenue growth once complete.
National Storage REIT (ASX: NSR)
Another dividend option to consider is this self storage operator. I’m a big fan of National Storage due to its strong market position and growth through acquisition strategy. This strategy helped the company overcome the negative impact of the pandemic and report a 9% increase in underlying earnings to $67.7 million in FY 2020.
Although management is expecting its earnings to be flat at best in FY 2021, I still expect it to provide investors with a generous yield. The company is forecasting earnings of 7.7 cents to 8.3 cents per share this year and a dividend pay out ratio of 90% to 100%. Based on the current National Storage share price, the middle of this range implies a 4.2% distribution yield.
These 3 stocks could be the next big movers in 2020
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. 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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