Next week the Reserve Bank of Australia will be deciding on the cash rate once again.
According to the latest cash rate futures, at present the market is pricing in a 47% probability of a rate cut at this meeting.
While I’m not convinced rates will go lower from here, I am convinced that they will stay at ultra-low levels for a number of years to come.
In light of this, I continue to see the share market as the best place for investors to turn to for income.
But which shares should you buy? These three top ASX dividends shares are high on my list:
Commonwealth Bank of Australia (ASX: CBA)
If you don’t already have exposure to the big four banks, then I think it would be worth considering Commonwealth Bank. While trading conditions are tough for the banks, I’m optimistic that the worst is largely behind them now. This could make it an opportune time to make a patient investment in Commonwealth Bank’s shares. I expect the bank to cut its dividend to ~$3.70 per share in FY 2021, which implies a forward fully franked 6% yield.
Rio Tinto Limited (ASX: RIO)
I think Rio Tinto could be worth considering. Especially with iron ore prices trading at lofty levels and some tipping prices to go even higher. This should lead to Rio Tinto delivering strong profits for at least the next couple of years. And given the strength of its balance sheet, I expect the majority of its free cash flow to be returned to investors. Last week Morgans suggested that Rio Tinto’s shares offer a fully franked ~9% FY 2021 dividend yield.
Wesfarmers Ltd (ASX: WES)
A final dividend share to consider buying is Wesfarmers. It is the conglomerates behind brands such as Bunnings, Kmart, Target, online retailer Catch, and Officeworks. It also owns a number of businesses in the chemicals and industrials industries. And while its shares may not offer the biggest yield, I believe its businesses leave it well-placed to grow its dividend at a solid rate over the next decade. At present I estimate that its shares offer a forward fully franked ~3.7% dividend yield.
And here is another dividend share which looks well-positioned to grow strongly over the next decade. This could make it a must buy for income investors..
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More reading
- ASX 200 rallies hard, no longer in bear territory
- Latest spending data could drive the ASX retail sector higher
- Why ANZ, CBA, NAB, and Westpac shares are storming higher today
- 3 top ASX dividend shares to buy in June
- Leading brokers name 3 ASX 200 shares to sell today
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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