According to the latest cash rate futures, there market is pricing in a 65% probability of the Reserve Bank taking rates to zero in February.
Whether or not this transpires, time will tell. But one thing that is for sure, is that rates are unlikely to be going higher for a long time to come.
In fact, the latest Westpac Banking Corp (ASX: WBC) economic report reveals that its team expect rates to stay where they are until at least the end of 2022, but probably longer.
In light of this, if you want to overcome low interest rates, then you might want to add some dividend shares to your portfolio.
Two ASX dividend shares with generous yields are listed below:
National Storage REIT (ASX: NSR)
National Storage is one of the region’s largest self-storage providers. From its 200+ centres across Australia and New Zealand, the company tailors self-storage solutions to residential and commercial customers.
It has been growing at a solid rate over the last decade thanks to a combination of organic and inorganic growth. While trading conditions are tough at present because of the pandemic, it continues to supplement its growth with acquisitions. Looking beyond the pandemic, the future looks positive due to its exposure to ecommerce and a potential rebound in the housing market in 2021.
Management recently provided guidance for earnings per share to be at the upper end of its guidance range of 7.7 cents per share to 8.3 cents per share. It is also expecting an FY 2021 distribution of 90% to 100% of its underlying earnings. Based on this and the latest National Storage share price, this will mean a ~4% dividend yield in FY 2021.
Rural Funds Group (ASX: RFF)
Another option for investors to look at is property company Rural Funds. It owns a diversified portfolio of high quality Australian agricultural assets that are leased to experienced agricultural operators. The company’s revenues are derived from long-term leases across five sectors: almonds, cattle, vineyards, cropping and macadamias.
Given their ultra-long leases and built-in rental increases, Rural Funds appears well positioned to continue growing its rental income and distribution at a solid rate over the next decade. That certainly will be the case this in FY 2021. The company plans to increase its distribution by 4% to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a generous 4.3% yield.
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Returns As of 6th October 2020
More reading
- 4 rock-solid ASX dividend shares to buy for 2021
- 2 ASX dividend shares for 2021’s zero interest rate world
- Why the National Storage (ASX:NSR) share price is dropping lower
- Why the IOOF (ASX:IFL) share price is one to watch on Friday
- 2 quality ASX dividend shares with 5%+ yields
Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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