If you’re looking to beat low interest rates with dividend shares, then I think the three listed below would be top options.

Here’s why I think they would be good options for income investors right now:

Coles Group Ltd (ASX: COL)

The first dividend share I would buy is this supermarket giant. I think Coles is a top option due to its defensive qualities and positive long term growth outlook. Combined with its cost cutting plans, I believe Coles is well-placed to grow its earnings and dividends at a solid rate over the next decade. Another positive is its favourable dividend policy of returning upwards of 90% of its earnings to shareholders. Based on this, I expect its shares to provide investors with a fully franked dividend yield of 4.1% in FY 2021.

Rural Funds Group (ASX: RFF)

Another dividend share to consider buying is Rural Funds. It is a property company that owns a diversified portfolio of high quality Australian agricultural assets that are leased to experienced agricultural operators. It generates its revenue from long-term leases across five sectors: almond orchards, cattle assets, vineyards, cotton assets, and macadamia orchards. Due to its lengthy tenancy agreements, Rural Funds has good visibility with its earnings. This means it has been able to provide guidance for the next couple of years. It plans to pay distributions of 10.85 cents per share in FY 2020 and then 11.28 cents per share in FY 2021. This equates to yields of 5.85% and 6.1%, respectively.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

A final option for income investors to consider buying is the Vanguard Australian Shares High Yield ETF. I think this exchange traded fund is a top option for investors that don’t have enough funds to diversify their portfolio effectively. This is because it provides investors with exposure to many of the highest yielding blue chip shares on the ASX through a single investment. At present I estimate that its units provide a forward dividend yield of ~4.5%.

More reading

• 3 super strong ASX 200 blue chip shares to buy right now
• Wesfarmers share price lower after announcing major Target overhaul
• ASX retail stocks facing new billion-dollar earnings scare during COVID-19 recovery
• 3 ASX retail shares to own for the next 20 years
• Is the Wesfarmers share price in the buy zone?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of 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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ASX small cap stocks are outrunning their larger counterparts since the bear market bottom on March 23.

The S&P/ASX Small Ordinaries (Index:^AXSO) bounced by nearly 40% since while the S&P/ASX 200 Index (Index:^AXJO) recovered by 22%.

There’s a real chance that smaller stocks can continue to outperform if we get firmer signs of the economic recovery from the COVID-19 pandemic.

That’s a big “if” but for the eternal optimists in us, there are still buying opportunities at the small end of the market even after the big run.

Here are two ASX small caps that brokers are urging investors to buy.

Dirt cheap

One that’s deeply undervalued is mining and construction engineering group NRW Holdings Limited (ASX: NWH), according to UBS.

The broker reiterated its “buy” recommendation on the stock after management’s latest trading update and guidance.

The group reported revenue of $1.6 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) of $177 million for the 10 months to April.

“Annualised EBITDA and EBIT are 8% and 11% below UBSe, respectively,” said UBS.

“However, we expect this would not include claims recovery from higher COVID-19 related operating costs and we estimate profitability has historically been higher in Q4 vs Q3; both suggestive of upside risks.”

The broker’s 12-month price target on NRW is $4 a share.

Buy call retained

Another small cap that issued a trading update is Service Stream Limited (ASX:SSM). The infrastructure services group is forecasting FY20 EBITDA of around $108 million.

That’s below consensus estimates of $116 million and Macquarie Group Ltd’s (ASX: MQG) forecasts of $113.9 million.

The coronavirus fallout is impacting on group performance. The earnings miss is due to higher costs due to safety expenses, clients pausing work and the commencement of minor projects.

“With NBN activations remaining strong through 2H20, we suspect the weakness from delays are mixed and related to some reluctance on decision making from client to pursue projects and to interrupt connections in both utility and telecommunications whilst Australia works from home,” said Macquarie.

That’s good news in the sense that the headwind is transitionary. The broker also pointed out that Service Stream isn’t a beneficiary of the JobKeeper program unlike others. If the lift from the government program was excluded, Service Stream would be in a far superior position compared to peers.

Macquarie still expects Service Stream to be net cash positive by this financial year and reiterated its “outperform” recommendation on the stock with a price target of $2.88 a share.

More reading

• 3 super strong ASX 200 blue chip shares to buy right now
• Why this ASX infrastructure company could help protect your portfolio in a downturn
• Here are all the ASX 200 shares that have doubled or more since the bottom of the bear market
• Is Afterpay an ASX blue chip of tomorrow?
• Brokers name 3 ASX 200 shares to buy right now

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Service Stream 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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The S&P/ASX 200 Index (ASX: XJO) is home to a large number of quality blue chip shares for investors to choose from.

In fact, there are so many it can be hard to decide which ones to buy.

To narrow things down for you, I’ve picked out three blue chip shares which I think are in the buy zone right now. They are as follows:

Coles Group Ltd (ASX: COL)

I think Coles is a great blue chip option for those searching for a combination of value, growth, and income. At present I feel the supermarket giant’s shares are trading on an attractive valuation in comparison to its peers. Especially given its solid growth potential thanks to its focus on automation, cost cutting, and expansion opportunities. In respect to automation, this focus is expected to lead to margin improvements over the long term. I feel this bodes well for Coles’ dividend growth over the next decade.

Goodman Group (ASX: GMG)

Another blue chip to consider buying is Goodman Group. It is an integrated commercial and industrial property group which owns, develops and manages industrial real estate in 17 countries. Goodman Group has made some very smart investments over the last decade, which I feel positions it perfectly for long term growth. These include gaining exposure to the structural tailwinds of the ecommerce market. Given how quickly online shopping is growing, these assets are likely to be in demand for a long time to come and should underpin solid earnings and distribution growth throughout the 2020s.

REA Group Limited (ASX: REA)

Another blue chip share to consider buying is REA Group. I think the property listings company is a great option due to the resilience of its business model. Even though listings volumes were down during 7% during the third quarter, it didn’t stop REA Group from growing its earnings. The company posted a 1% increase in revenue to $199.8 million and an 8% lift in operating earnings to $119.6 million. And while trading conditions are likely to remain tough in the near term because of the pandemic, I expect its earnings growth to accelerate once the crisis passes. I feel this makes it worth being patient with its shares.

More reading

• Here are all the ASX 200 shares that have doubled or more since the bottom of the bear market
• Is Afterpay an ASX blue chip of tomorrow?
• Brokers name 3 ASX 200 shares to buy right now
• Is Telstra about to be caught in a new mobile phone war?
• ASX 200 down 0.2%: Wesfarmers overhauls Target, Sydney Airport has no plans to raise equity

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended ResMed Inc. 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 super strong ASX 200 blue chip shares to buy right now appeared first on Motley Fool Australia.

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