Although there have been a large number of dividend cuts and deferrals this year because of the pandemic, there are still plenty of companies sharing their profits with shareholders.
Three quality shares which continue to perform strongly and look set to pay generous dividends over the next 12 months and beyond are listed below. Here’s why I think they could be great options:
BHP Group Ltd (ASX: BHP)
The first dividend share I would consider buying is BHP. I think the mining giant is a top option right now due to its world class and low cost operations and favourable commodity prices. The latter is particularly the case with iron ore. Thanks to supply disruptions and robust demand, the steel making ingredient is currently commanding a price of over US$100 a tonne. This means BHP’s iron ore operations are generating high levels of free cash flow. The majority of which I expect to be returned to shareholders. I estimate that BHP’s shares currently provide investors with a forward fully franked ~5% dividend yield.
BWP Trust (ASX: BWP)
BWP Trust is a real estate investment trust and the landlord to 68 Bunnings Warehouse stores. While many retail store landlords have been negatively impacted by the pandemic, BWP has continued to collect rent as normal. I believe this is a testament to the quality of its tenancies. And given how the government is supporting the renovation market with additional stimulus, I believe Bunnings is well-placed to continue its growth over the coming years. Overall, I feel this leaves BWP positioned to increase its rental income and distribution at a modest rate for the foreseeable future. At present I estimate that its shares offer a 4.7% FY 2021 distribution yield.
Wesfarmers Ltd (ASX: WES)
A final dividend share to consider buying is Wesfarmers. I’m a big fan of the conglomerate due to its strong businesses and their positive long term outlooks. As I mentioned above, I believe the Bunnings business is well-placed for growth over the medium term thanks to its high quality business model and government stimulus. This is a big boost for Wesfarmers as it is the biggest contributor to the company’s earnings now. Outside this, I expect Wesfarmers to add to its portfolio with value accretive acquisitions in the near term. Combined, this could lead to its earnings and dividends growing at a solid rate over the next decade. At present I estimate that its shares offer a fully franked 3.7% FY 2021 dividend yield.
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More reading
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- The best placed ASX stocks for the August reporting season
- Safe ASX 200 dividend shares to buy today
- Wesfarmers and one more ASX share I’d buy in another market crash
- Here are 5 rebound shares to buy with $5,000
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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