As I mentioned here yesterday, it is looking increasingly likely that rates will be going lower before they go higher again.
While this is good news for borrowers, it certainly isn’t for savers and income investors.
If you’re in the latter group, then you might want to consider buying one of these ASX dividend shares:
Commonwealth Bank of Australia (ASX: CBA)
The first ASX dividend share I would buy is Commonwealth Bank. Australia’s largest bank is my favourite option in the banking sector due to the quality of its operations and robust balance sheet. In respect to the latter, when it released its full year results in August, it reported a CET1 ratio of 11.6%. This is comfortably ahead of APRA’s ‘unquestionably strong’ benchmark of 10.5% and leaves it well-placed to navigate the current crisis. Another positive is the recent relaxing of responsible lending rules, which I expect to be a major boost to its lending this year.
Estimating what dividend Commonwealth Bank will pay in FY 2021 is tricky because of the pandemic. However, I believe something in the region of $3.00 per share is possible. Based on the latest Commonwealth Bank share price, this equates to a generous fully franked 4.5% yield.
People Infrastructure Ltd (ASX: PPE)
Another dividend share to consider buying is People Infrastructure. It is a leading workforce management company that provides innovative solutions to workforce challenges. People Infrastructure was an impressive performer in FY 2020, delivering a sizeable 34.5% increase in revenue to $374.2 million and a 53.3% lift in normalised net profit after tax and before amortisation (NPATA) to $18.4 million.
While the pandemic means trading condition will be tough in FY 2021, I’m optimistic it will continue its positive form and deliver further growth in earnings and dividends. Especially given management’s plan to look at expediting its growth with acquisitions. At present, I estimate that it will pay a 9.5 cents per share fully franked dividend in FY 2021. Based on the current People Infrastructure share price, this gives investors an attractive 3.2% forward dividend yield.
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More reading
- ASX 200 finishes the week with a bang
- Are ASX bank shares a buy after lending rules eased?
- ASX 200 up 1.5%: Big four banks rocket higher, Premier Investments delivers record profit
- Why ASX bank shares are rocketing up Friday
- Westpac (ASX:WBC) share price hits 4-month low. Is it time to buy the ASX bank?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended People Infrastructure Ltd. 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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