Earlier this month the Reserve Bank of Australia kept the cash rate on hold at a record low of 0.1%.
Unfortunately, it could be a long time until interest rates move higher from here, let alone back to normal levels.
In light of this, income investors look set to be better off sticking with dividend shares instead of term deposits or savings accounts.
But which dividend shares should you buy? Two top dividend to consider buying are listed below. Here’s why they could be great options in this low interest rate environment:
National Storage REIT (ASX: NSR)
The first option to consider is National Storage. This self-storage operator appears well-positioned to grow its income and distribution at a solid rate over the long term.
This is thanks to its strong position in a fragmented market, its growth through acquisition strategy, and the booming housing market. The latter traditionally results in strong demand for its units.
In addition to this, an increasing number of small businesses are using its storage units for non-traditional uses such as running their ecommerce businesses. This is made possible thanks to supplied Wi-Fi, shelving, power connectivity, and packaging supplies.
Based on the current National Storage share price and its guidance for FY 2021, its shares currently offer a forward 3.5% distribution yield.
Telstra Corporation Ltd (ASX: TLS)
Another ASX dividend share for income investors to consider is Telstra. The telco giant could be a quality option due to its improving outlook and attractive valuation.
In respect to the former, thanks to a combination of cost cutting, rational competition, and a positive growth outlook in the mobile business, Telstra appears well-placed to return to growth from FY 2022. This should be boosted further by its separation and asset monetisation plans.
In light of the above, Morgan Stanley is forecasting a 16 cents per share fully franked dividend for FY 2021 and FY 2022. This represents a generous 4.7% dividend yield.
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Returns As of 15th February 2021
More reading
- This underperforming ASX large cap is sitting on a ~10% dividend yield
- ASX stock of the day: Over The Wire (ASX: OTW) shares bounce
- Telstra (ASX:TLS) share price falls amid overseas expansion talks
- What’s happening with the Pentanet (ASX:5GG) share price today?
- WAM Leaders thinks these 2 ASX shares are a buy
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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