With interest rates at such low levels, it is nearly impossible to earn a sufficient income from term deposits and savings accounts.
But don’t worry, because the share market is here to save the day with countless dividend shares offering generous yields.
But which dividend shares should you buy? Three to consider are listed below:
BHP Group Ltd (ASX: BHP)
I think the Big Australian would be a great dividend share to buy if you’re not averse to investing in the resources sector. Thanks to favourable commodity prices, I believe BHP is well-positioned to deliver strong free cash flows over the coming years. And given how robust its balance sheet is at present, I suspect the majority of this free cash flow will be returned to shareholders. I estimate that the mining giant’s shares currently offer investors with a forward fully franked ~5% dividend yield.
Transurban Group (ASX: TCL)
Another dividend share to consider buying is this toll road operator. Transurban owns a portfolio of key toll roads in Australia and North America. Although its performance this year will be impacted by a significant decline in traffic volumes because of the pandemic, I believe volumes will now be recovering and could return to previous levels again next year. As a result, I believe it could be a great time to consider a long term and patient investment. I estimate that its shares offer a 3.3% FY 2021 distribution yield.
Treasury Wine Estates Ltd (ASX: TWE)
A sharp pullback in this wine company’s share price over the last six months could be a buying opportunity for patient income investors. While its performance in FY 2020 has been underwhelming (even before the pandemic), I believe it does have a positive long term outlook. This is due to the strong demand for its wines in China and its premiumisation strategy. Its shares currently offer a trailing 3.4% dividend yield. And while this dividend is likely to be cut in response to the pandemic, I believe it will rebound in FY 2021/2022. This could make it worth considering with a long term view.
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More reading
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- ASX 200 down 0.1%: Carsales update impresses, a2 Milk surges higher
- Why I would buy CSL and these ASX blue chip shares
- The Treasury Wine share price is up 13% in a month: Is it too late to invest?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Transurban Group. 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.
The post 3 ASX dividend shares to buy to beat low interest rates appeared first on Motley Fool Australia.
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