Later today the Reserve Bank of Australia will meet to discuss the cash rate.
While a full rate cut to zero seems unlikely, a number of economists believe a partial cut down to 0.1% from 0.25% could happen.
This would be great news for borrowers, but certainly not for savers and income investors who will have to contend with even lower interest rates.
Luckily for the latter group, the Australian share market is home to a large number of dividend shares that can help you beat these low rates.
Two that I would buy are listed below:
Dicker Data Ltd (ASX: DDR)
The first ASX dividend share I would buy is Dicker Data. It is a wholesale distributor of computer hardware and software. Due to an increasing number of vendor relationships and robust demand for information technology products, Dicker Data has been growing its earnings and dividends at a strong rate over the last five years. This has continued even during the pandemic thanks to the work from home initiative and the shift to the cloud. Based on the current Dicker Data share price, I estimate that it offers a fully franked forward 4.55% dividend yield.
Telstra Corporation Ltd (ASX: TLS)
I think this telco giant would be a great option for income investors due to its improving outlook. This is due to its T22 strategy, 5G internet, and the easing of the NBN headwind. Combined, I believe a return to earnings and dividend growth could be on the cards in the coming years. In the meantime, I believe its 16 cents per share dividend is sustainable if it shifts its dividend policy to be based on free cash flow. Based on the latest Telstra share price, investors would receive a very generous fully franked 5.65% dividend yield if it does sustain its current payout in FY 2021.
Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now
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More reading
- How to generate a passive income of $50,000 with ASX shares
- Beat the RBA rate cuts with these ASX dividend shares
- Meet the ASX 200 stock with a dividend yield that’ll hit ~14% in FY22
- The Telstra (ASX:TLS) share price is at a new 52-week low
- 2 high yield ASX dividend shares to solve your income needs
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 and Telstra 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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