Fortunately for income investors in this low interest environment, the Australian share market is home to a large number of dividend-paying companies.
Three ASX dividend shares which I think are in the buy zone right now for income investors are listed below. Here’s why I would buy them:
Dicker Data Ltd (ASX: DDR)
Dicker Data 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 during the pandemic thanks to the work from home initiative and the shift to the cloud. As a result, Dicker Data intends to lift its fully franked dividend by 31% to 35.5 cents per share in FY 2020. Based on the current Dicker Data share price, this represents an attractive 5% dividend yield.
Telstra Corporation Ltd (ASX: TLS)
Another dividend share that I would buy is Telstra. With the telco giant’s medium term outlook looking the brightest it has been in a long time, I think now is a great time to invest. This improving outlook is due to its T22 strategy, rational competition, 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. For now, though, I believe its 16 cents per share dividend is sustainable. Which based on the latest Telstra share price, equates to a fully franked 4.6% dividend yield.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
A final option to consider buying is the Vanguard Australian Shares High Yield ETF. This exchange traded fund gives investors exposure to 62 of the highest yielding shares on the ASX through just a single investment. This includes the likes of the big four banks, mining giants, and Telstra. At present I estimate that its units offer a forward dividend yield of at least 4.5%.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
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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 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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