On Tuesday the Reserve Bank of Australia decided against taking the cash rate to zero and kept it on hold at 0.25%.
While this was a small win for savers and income investors, it doesn’t change the fact that the interest rates on offer with savings accounts and term deposits are at ultra-low levels.
The good news is that you can beat these low rates by investing in ASX dividend shares. But which ones? Here are two top ASX dividend shares I would buy:
National Australia Bank Ltd (ASX: NAB)
If you have space in your portfolio for a bank share, then I think NAB could be worth considering. While it has certainly been a tough year for the banking giant, I believe the selling of its shares has been overdone and left them trading at an attractive level.
This is certainly the case for income investors, given the generous yield on offer with its shares. Based on the latest NAB share price, I estimate that it provides investors with a fully franked 5.2% FY 2021 dividend yield.
Telstra Corporation Ltd (ASX: TLS)
A final dividend share for income investors to consider buying is Telstra. I’ve been impressed with the progress of its T22 strategy and believe it will make Telstra a much stronger company in the future. In addition to this, it is worth noting that the NBN rollout is nearing completion. This means it may not be too long before this earnings headwinds eases and the company returns to growth again.
As a result, I think now would be a good time to consider a patient investment in its shares. Based on the current Telstra share price and my belief that its 16 cents per share dividend is sustainable for the foreseeable future, the telco giant currently offers a 4.7% fully franked dividend yield.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
More reading
- These ASX shares are swept up by the new Victorian COVID-19 lockdown
- Why retirees should buy Coles and Telstra shares for income
- Why the CBA share price and other ASX banks could outperform in FY21
- 2 five-star ASX shares for strong long-term growth
- ASX 200 Weekly Wrap: Afterpay, Tech push ASX 200 back above 6,000
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. 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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