Instead of putting your money into term deposits which provide only paltry interest rates, I would suggest you look at some of the quality dividend shares the ASX has to offer.

Three which I think would be great alternatives to term deposits are listed below. Here’s why I like them:

Commonwealth Bank of Australia (ASX: CBA)

I think this banking giant is a top dividend share to consider buying. Although Commonwealth Bank will almost certainly cut its dividend materially in FY 2021, I believe it will still offer an above-average yield. At present I believe a fully franked dividend of $3.70 per share is possible next year, which equates to an attractive fully franked 5.35% yield. This estimate could prove to be conservative if the economic damage from the pandemic isn’t as bad as first feared.

Rio Tinto Limited (ASX: RIO)

If you’re not averse to buying mining shares, then Rio Tinto could be a top option for income investors. This is because the high prices that iron ore is commanding at present, thanks to strong demand and supply constraints, means the mining giant is well-placed to deliver strong profits in FY 2020 and FY 2021. And given the strength of its balance sheet, I suspect the company will return the majority of its free cash flow to investors through dividends. In light of this, I estimate that its shares offer a forward fully franked dividend yield of at least 5%.

Transurban Group (ASX: TCL)

Another dividend share to look at buying is Transurban. I think the toll road operator could be a great option for income investors due to the quality of its portfolio and its positive long term outlook. In a recent update, Transurban revealed that its traffic volumes are improving greatly. I believe this bodes well for FY 2021 and could mean a distribution close to normal levels again. At present I estimate a dividend of 49 cents per unit next year, which equates to a 3.3% distribution yield.

More reading

• Should you buy ANZ, CBA, NAB, or Westpac? Here’s what this broker thinks
• Is the Afterpay share price a boom or a bubble?
• ASIC hits Commonwealth Bank with civil proceedings
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 finishes flat, ASX travel shares drop

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Forget term deposits! These ASX dividend shares are better appeared first on Motley Fool Australia.

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On Tuesday the S&P/ASX 200 Index (ASX: XJO) fought hard to carve out a solid gain. The benchmark index climbed 0.2% to 5,954.4 points.

Will the market be able to build on this on Wednesday? Here are five things to watch

ASX 200 poised to rise.

The ASX 200 looks set to push higher on Wednesday after a positive night of trade for U.S. stocks. According to the latest SPI futures, the benchmark index is expected to rise 4 points or 0.1% at the open. Overnight on Wall Street the Dow Jones rose 0.5%, the S&P 500 pushed 0.4% higher, and the Nasdaq index climbed 0.7%. U.S. stocks lifted amid optimism that a trade deal with China isn’t over.

Oil prices tumble.

Concerns over weakening demand for oil weighed on prices and could weigh on the likes of Oil Search Ltd (ASX: OSH) and Santos Ltd (ASX: STO) on Wednesday. According to Bloomberg, the WTI crude oil price is down 1.3% to US$40.21 a barrel and the Brent crude oil price is 1.3% lower to US$42.54 a barrel.

Gold price jumps again.

Gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could be on the rise today after the gold price jumped higher. According to CNBC, the spot gold price is up 1.1% to US$1,785.50 an ounce after the U.S. dollar weakened. The precious metal is now trading at its highest level since October 2012.

Afterpay UK update.

The Afterpay Ltd (ASX: APT) share price will be on watch on Wednesday after a late announcement by the payments company. Afterpay revealed that its UK-based Clearpay business now has over 1 million active customers on its platform after a year in the country. Another positive is that management notes that consumers are using its platform more frequently than they were in the U.S. at the same stage.

Coles given buy rating.

The Coles Group Ltd (ASX: COL) share price could be heading a lot higher from here according to analysts at Goldman Sachs. After looking through updates from two of its rivals this week, the broker has lifted its fourth quarter forecasts to reflect stronger than expected industry growth trends. Goldman has a conviction buy rating and $18.60 price target on its shares.

More reading

• Afterpay share price on watch after reaching 1 million UK customers
• ASX 200 finishes higher, Woolworths gives update
• Invest like Warren Buffett by buying and holding these ASX 200 shares
• Why James Hardie is a favourite buy among leading brokers
• Why top brokers are urging you to buy SEEK and these other ASX stocks today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and COLESGROUP DEF SET. 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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