ASX dividend shares like Telstra Corporation Ltd (ASX: TLS) are a valuable asset these days. Even though the Reserve Bank of Australia (RBA) left interest rates on hold this week, we still have rates at record lows.

That means the value of holding cash in the short-to-medium term is negligible and could actually be detrimental to your wealth if you consider the effects of inflation.

That’s why I think ASX shares like those of Rural Funds Group (ASX: RFF), Commonwealth Bank of Australia (ASX: CBA) and Telstra are the best place to put your hard-earned dollars to work if you have a yearning for dividend yield.

Rural Funds shares

Rural Funds is an agriculture-based real estate investment trust (REIT) which owns tranches of Aussie farmland. Productive land is usually a great investment, and so I think Rural Funds is a great business to have some capital go towards.

It currently leases out farmland for several different crops, including macadamias, almonds, cotton, and vineyards. Rural Funds is currently offering a trailing dividend yield of 4.09%, which it aims to increase by 4% annually.

CommBank shares

CommBank isn’t the first ASX dividend share that comes to mind for strong income in 2020. All 3 of the other big 4 ASX banks have delivered substantial dividend cuts in 2020 – or have ‘deferred’ dividend payments altogether. We haven’t yet yeard from CBA on what to expect from its final dividend this year, but it’s almost certain not to come in anywhere near 2019’s level.

Even so, I think this ASX bank is the best of the banking bunch for future dividend potential. It’s unquestionably our strangest bank and will be first in line to benefit from a recovering Australian economy. There might not be much in the way of dividends this year, but I’m far more bullish on 2021 and beyond.

Telstra shares

Telstra is another great dividend share to consider today. This telco giant is the market leader in providing both fixed-line internet services, mobile phones and mobile networks. It’s also set (in my opinion) to become the market leader in the new 5G technology that is set to roll out soon. Internet services are regarded as a ‘need’ rather than a ‘want’ these days – especially with the ‘work from home’ trend we have seen so far in 2020. As such, I view the telco space as very defensive.

The company also has a strong dividend of 16 cents per share that it looks to continue to fund this year. On current prices, that would give Telstra shares a trailing yield of 4.91% – or 7.01% grossed-up with full franking credits.

More reading

• Why I would buy these outstanding ASX 50 shares right now
• Is the CBA share price cheap today?
• 3 high yield ASX dividend shares to buy right now
• ASX 200 jumps 1.8%, Australian headed for recession
• JobMaker is coming. These 3 ASX 200 shares could benefit

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and 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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There’s no denying that ASX shares are starting to look fully priced. But there’s still value to be found as top brokers have just upgraded three to “buy”.

These ASX stocks are part of the S&P/ASX 200 Index (Index:^AXJO), which is on track to chalk up its fourth straight day of gain this week.

No wonder experts are worried about overstretched valuations as the market jumped 32% since hitting the bear market low in March.

While we may not have seen the worst of the economic impact from the COVID-19 pandemic, brokers don’t think you should wait to buy the following stocks.

The right minerals

The Iluka Resources Limited (ASX: ILU) share price jumped 2.4% to $9.01 in after lunch trade after Goldman Sachs upgraded the mineral sands miner to “buy” from “neutral”.

The broker turned bullish following Iluka’s latest market update on its mineral sands and rare earth project pipeline.

Iluka’s attractive valuation, the upside from its demerger of royalty generating MAC asset, improving mineral sands sales and Goldman’s prediction of a zircon supply deficit in 2021 prompted the upgrade.

The broker’s 12-month price target on the stock is $10.10 a share.

Property bounce back

Another stock that’s outperforming today is the Stockland Corporation Ltd (ASX: SGP) after the federal government announced its $688 million HomeBuilder stimulus and Morgan Stanley upgraded the stock.

But the government’s stimulus is only one reason why the broker lifted its recommendation on Stockland to “overweight” from “equal-weight”.

The proposed change to stamp duty and property tax and a faster than expected reopening of retail outlets in malls owned by Stockland are additional factors behind the upgrade.

The broker increased its price target on the stock to $4.30 from $3.10 a share.

On a recovery path

The aluminium-alumina market has been hit by the coronavirus shutdown but the gradual reopening of the global economy is set to drive prices for the commodity higher, according to UBS.

The expected turnaround prompted the broker to upgrade its recommendation on Alumina Limited (ASX: AWC) to “buy” from “neutral”.

This could explain why the Alumina share price jumped 2.9% to $1.69 in late afternoon trade.

“We estimate that ~50% of the alumina industry is loss making at today’s spot price of US$250/t,” said the broker.

“This is unsustainable on a medium- to long-term basis and with costs rising (caustic soda and energy), we believe cost push should support a higher alumina price.”

UBS increased its 12-month price target on the stock to $2.10 from $1.50 a share.

More reading

• Is the Qantas share price a buy?
• 3 large cap shares beating the ASX 200 this year
• Why the Nufarm share price is crashing lower today
• Should you be an ASX bull or bear right now?
• Top brokers name 3 ASX 200 shares to sell today

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High yield ASX dividend shares could be the answer to generate income in this difficult environment.

The Reserve Bank of Australia (RBA) has pushed the official interest down to an extremely low level. How are people supposed to make an income from their assets?

Not only do savings accounts now offer a tiny interest rate, but many income shares have seen their yields compressed in the past few years (and weeks).

The difficulty is that the income is even less certain now with the ongoing global coronavirus pandemic. I think high yield ASX dividend shares could be the answer. 

With that in mind, there are some ASX dividend shares with yields above 9%:

WAM Research Limited (ASX: WAX)

WAM Research is a listed investment company (LIC) which is run by the high performing team at Wilson Asset Management.

This ASX dividend share has a grossed-up dividend yield of 9.7%. It has also grown its dividend every year since the GFC. That’s an attractive combination for income. Of course, the profit reserve could run out if the LIC doesn’t keep generating profits whilst paying these big dividends.

It makes money by identifying the best small and medium businesses on the ASX where there’s a catalyst that could re-rate the share price. It can then fund the dividend from the investment returns.

I also like that the LIC holds a high amount of cash for protection and opportunities during times like this.

Naos Emerging Opportunities Company Ltd (ASX: NCC)

This one is another LIC. It is another high yield ASX dividend share. It currently has a grossed-up dividend yield of 12.8%.

The Naos LIC only invests in businesses with a market capitalisation under $250 million.

Naos does things pretty differently to many other fund managers. It holds a portfolio of only around 10 high-conviction share ideas.

Over time these small cap shares can grow into much bigger businesses and also start paying dividends.

It has grown or maintained its dividend every year since it started paying one in FY13. It’s building its status as a solid ASX dividend share.

Fortescue Metals Group Limited (ASX: FMG)

Fortescue is one of Australia’s largest iron ore miners. When times are good for iron ore it is able to fund very large dividends.

Before the coronavirus pandemic the iron ore price was at a good level. But things are looking pretty tough in Brazil with the spread of COVID-19. That’s where Australia’s main iron ore competition comes from. The iron ore price has risen even more in the past few months.

This should mean that the ASX dividend share is able to continue paying its big dividend as long as China and an upcoming court case don’t derail the rosy picture.

Fortescue currently has a grossed-up dividend yield of 9.8%

Foolish takeaway

Each of these ASX dividend shares have big yields with a high chance of paying a big dividends over the next 12 months. At the current prices I’d probably go for the Naos one because its yield is the biggest and its share price hasn’t grown strongly in the past couple of months.

More reading

• Should the Xero share price have a P/E ratio of 4,000?
• Are our ASX big miners on an earnings upgrade cycle?
• These ASX shares were among the best performers in May, surpassing the ASX 200
• These ASX shares just zoomed to multi-year highs
• Why you might want to own ASX mining shares in 2020

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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