According to the most recent weekly economic report out of Westpac Banking Corp (ASX: WBC), its team continue to expect the cash rate to stay on hold at 0.25% for some time to come.
It looked at recent comments out of the Reserve Bank and feels confident that rate hikes are a long way off.
Westpac commented: “The Governor is entirely confident that the cash rate will not be increased for three years given the requirement for the Board to be confident that inflation would be sustainably within the 2–3 % band.”
This means income investors are likely to be contending with low interest rates for some time to come.
But don’t worry, because the ASX dividend shares listed below could help you earn an income. Here’s why I would buy them:
Dicker Data Ltd (ASX: DDR)
I think Dicker Data is well-positioned to continue growing its dividend for the foreseeable future. It is a wholesale distributor of computer hardware and software across the ANZ region. While countless companies are struggling in 2020, Dicker Data has been delivering record sales and profits. During the first half of FY 2020, the company reported half year revenue above $1 billion for the first time and a 30.4% lift in net profit before tax to $42 million. As a result, the company is aiming to lift its full year dividend by over 30% to 35.5 cents per share. Based on the current Dicker Data share price, this represents a generous fully franked 4.8% dividend yield.
Wesfarmers Ltd (ASX: WES)
Another company which I think is well-placed to continue growing its dividend over the coming years is Wesfarmers. This is due to the quality of its portfolio and particularly its Bunnings business. The hardware giant is the conglomerate’s biggest contributor to earnings and has been performing very strongly during the pandemic. And thanks to government stimulus which is supporting the home improvement market, I expect this positive form to continue in FY 2021. Overall, I expect this to lead to Wesfarmers paying shareholders a fully franked dividend of $1.46 per share in FY 2021. Based on the current Wesfarmers share price, this equates to a fully franked 3.1% dividend yield.
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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. The Motley Fool Australia owns shares of Wesfarmers 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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