There are a good number of dividend shares for investors to choose from on the Australian share market. Which certainly is good news given the low interest rate environment we’re living in.
Two that I think would be great options right now are listed below. Here’s why I think income investors ought to buy them:
Bravura Solutions Ltd (ASX: BVS)
Due to a sharp pullback in the Bravura share price over the last 12 months, I think it has now become a really good option for income investors. Bravura is a leading wealth management and transfer agency software solution provider. The key product in its portfolio is the Sonata wealth management platform. It is the biggest contributor to earnings, but is being supported by a number of other increasingly popular solutions. This includes the Rufus transfer agency solution, the Garradin back office solution, and the Midwinter financial planning solution.
Although its growth has been stifled by the pandemic, I remain confident that it will accelerate again once it passes. I expect this to result in strong earnings and dividend growth over the 2020s, which could make it a great buy and hold option for income investors. For now, I estimate that it will pay shareholders an 11.5 cents per share dividend in FY 2021. Based on the current Bravura share price, this equates to an attractive 3.75% dividend yield.
BWP Trust (ASX: BWP)
Another option to consider is BWP. It is the largest owner of Bunnings Warehouse sites in Australia, with a portfolio of 68 stores. At the end of FY 2020, the company had an occupancy rate of 98% and a weighted average lease expiry (WALE) of 4 years. From this, it was generating annual rental income of $151.4 million.
And while having such a reliance on a single tenant can be a dangerous thing, I see it as a strength on this occasion. This is due to the quality of the Bunnings brand, its positive growth outlook, and the fact that Bunnings’ owner, Wesfarmers Ltd (ASX: WES), is a major BWP shareholder with a ~23.6% stake. I believe this means Wesfarmers is unlikely to do anything that would have a negative impact on its investment. Finally, based on the current BWP share price, I estimate that it offers investors a forward 4.4% yield.
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Returns As of 6th October 2020
More reading
- 3 of the best mid cap ASX shares to buy right now
- These could be the next ASX stocks to unlock value by selling assets
- Top brokers name 3 ASX shares to buy today
- Buy these ASX dividend shares if the RBA cuts rates again
- Is the Wesfarmers (ASX:WES) share price a buy for growth or dividends?
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Bravura Solutions Ltd. 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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