On Tuesday the Reserve Bank of Australia will be holding its first meeting of the year to discuss the cash rate.
According to the latest cash rate futures, the market is currently pricing in a 75% probability of a cut to zero.
Whether or not a cut comes, we’ll find out on Tuesday, but one thing that is for sure, is that interest rates are going to be at very low levels for some time to come.
In light of this, ASX dividend shares look likely to be the best way to earn a passive income for some time to come.
With that in mind, I have picked out two ASX dividend shares with attractive yields. They are as follows:
National Storage REIT (ASX: NSR)
National Storage is one of the region’s largest self-storage operators. From over 190 locations across Australia and New Zealand, the company tailors self-storage solutions to thousands of residential and commercial customers.
The good news is that the company still sees plenty of room for growth in the future. In fact, since the end of FY 2020, the company has completed eight acquisitions totalling $139 million, has an acquisition pipeline that remains strong, and a number of development projects underway.
In respect to dividends, management advised that it expects to report underlying earnings per share of 7.7 cents to 8.3 cents in FY 2021. It also plans to pay 90% to 100% of its earnings out to shareholders as distributions.
Based on the middle of both guidance ranges, this equates to a 7.6 cents per share distribution. And with the National Storage share price trading at $1.91, this represents a 4% yield.
Wesfarmers Ltd (ASX: WES)
This conglomerate has been a very positive performer over the last 12 months. This is thanks largely to its key Bunnings business, which has delivered very strong sales growth despite the pandemic.
In fact, according to a note out of Goldman Sachs this month, it expects the home improvement business to report a 22.3% increase in revenue to $8,899.4 million for the first half. This is expected to underpin a 12.7% in group net profit to $1,269.8 million, allowing the Wesfarmers board to declare an interim dividend of 84.1 cents per share.
For the full year, Goldman Sachs estimates that Wesfarmers will pay a 162 cents per share fully franked dividend. Based on the latest Wesfarmers share price, this will mean a 3% dividend yield.
Though, it is worth noting that Credit Suisse is forecasting a larger dividend of $1.90 per share for FY 2021, which works out to be a more generous 3.5% yield.
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More reading
- What to expect from the Wesfarmers (ASX:WES) first half result
- Wesfarmers (ASX:WES) share price climbs to new record high
- These blue chip ASX shares just hit multi-year highs
- Why ASX travel shares like Webjet (ASX:WEB) fell lower on Monday
- 3 top ASX blue chip shares to buy
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. 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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