With many savings accounts offering base interest rates of just 0.05% at present, I think investors are better off looking to the share market for a source of income.
But which ASX dividend shares should you buy? Three top ASX dividend shares I would buy are listed below:
BWP Trust (ASX: BWP)
The first ASX dividend share to consider buying is BWP Trust. It is the largest owner of Bunnings Warehouse sites in Australia and has a total of 68 locations leased to the hardware giant. Given the quality of the Bunnings brand and its positive growth outlook, I believe it is a great tenant to have. Furthermore, I feel the risk of rental defaults or stores closures in the near term is very low. In light of this, I feel BWP is in a position to continue growing its income and distribution at a solid rate for the foreseeable future. Based on the latest BWP share price, I estimate that it offers investors a generous 4.7% FY 2021 distribution yield.
Rio Tinto Limited (ASX: RIO)
Another ASX dividend share to consider buying is this mining giant. I believe Rio Tinto is well-placed to deliver bumper free cash flows thanks to its strong iron ore production and the high prices the steel making ingredient is commanding. Positively, due to the strength of Rio Tinto’s balance sheet, I expect almost all of its free cash flow will be returned to shareholders in the near term. In light of this and based on the current Rio Tinto share price, I estimate that it currently offer a forward fully franked dividend yield of at least 5%.
Rural Funds Group (ASX: RFF)
A final dividend share to buy is Rural Funds. It is a leading agriculture-focused property company with a collection of quality assets leased to some of the biggest names in the industry. Another attraction for me is its long term tenancies. These have been designed to allow the company to consistently increase its distribution at a solid rate each year over the long term. For example, in FY 2020 it plans to pay 10.85 cents per share and in FY 2021 it intends to pay shareholders 11.28 cents per share. Based on the current Rural Funds share price, the latter equates to a generous 5.5% yield.
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
More reading
- Will the iron ore price crash by the end of 2020?
- 4 trends to invest in before August earnings season
- 2 of the best ASX dividend shares to buy now
- BHP’s share price tumbles with this other ASX miner after being hit by broker downgrades
- I would buy Coles and these ASX dividend shares right now
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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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