Unfortunately for income investors, it looks likely to be some time until interest rates return to normal levels again.

In light of this, I continue to believe the share market is the best place to earn a passive income.

But which ASX dividend shares should you buy out of the hundreds on offer? Three that I would buy are listed below:

Coles Group Ltd (ASX: COL)

The first dividend share to look at buying right now is Coles. I think the supermarket giant is a top option due to my belief that it is well-placed to grow both its earnings and dividend at a solid rate during the 2020s. This is thanks to the positive industry outlook, its long track record of delivering same store sales growth, and its cost cutting and automation plans. At present I estimate that Coles’ shares offer investors a fully franked 3.7% FY 2021 dividend.

Rural Funds Group (ASX: RFF)

Another dividend share that I would be buying is Rural Funds. This property group owns a diversified portfolio of high quality Australian agricultural assets which include cattle properties, vineyards, and orchards. One of the main attractions to the company for me is its long tenancy agreements. With a weighted average lease expiry of over a decade and rental increases built into contracts, Rural Funds appears perfectly positioned to consistently increase its distribution on a yearly basis. This will be the case in FY 2021, with management intending to lift its distribution by 4% to 11.28 cents per share. This represents a 5.4% yield.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

A final dividend share for income investors to look at is the Vanguard Australian Shares High Yield ETF. I think this exchange traded fund is a great option because it gives investors exposure to a diverse group of high yielding ASX dividend shares through a single investment. This could make it ideal for investors that don’t have enough funds to maintain a truly diverse portfolio. At present I estimate that its units provide a forward dividend yield of at least 4.5%.

More reading

• These 3 ASX ETFs are yet to recover from the market crash
• Australian retail sales up 16.3% in May
• Why the Wesfarmers share is beating the ASX 200
• 3 high quality ASX shares to bolster your retirement portfolio
• 3 high yield ASX dividend shares for income investors

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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This isn’t a typo. The Brent crude oil price could rocket to as much as US$190 a barrel in 2025, according to JPMorgan Chase.

This might sound like an outlandish call but it will be sweet music to the ears of the shareholders of ASX energy stocks.

While the sector heavyweights have bounced strongly with the rest of the S&P/ASX 200 Index (Index:^AXJO) since hitting the bottom of the bear market three months ago, they are still trading substantially below their pre COVID-19 levels.

ASX oil stocks on cusp of supercycle?

This includes sector heavyweights like the Woodside Petroleum Limited (ASX: WPL) share price, Santos Ltd (ASX: STO) share price and Oil Search Limited (ASX: OSH) share price.

This could be the time to be jumping back into the sector if JPMorgan’s prediction comes through.

The investment bank issued a report back in March saying we were on the cusp of an oil super cycle – but that was before the COVID-19 meltdown, reported CNN.

Probability of surging oil price is rising

But the pandemic, which was one of the key factors that sent the oil price crushing, isn’t putting off JPMorgan. If anything, its analysts are doubling down on its call.

“The reality is the chances of oil going toward $100 at this point are higher than three months ago,” CNN quoted Christyan Malek, JPMorgan’s head of Europe, Middle East and Africa oil and gas research as saying.

That view stands in stark contrast to what’s happened in the oil market. A big drop in demand for crude as the world curtailed activity to stem the coronavirus outbreak is only one factor.

Crude oil price on slippery slope

A price war between major oil producers Saudi Arabia and Russia exacerbated the worsening situation and sent the WTI into negative territory for the first time ever in April.

While the oil glut seems to be easing, most do not expect the oil price to move much higher from here. The Brent oil price last traded at US$42.19 a barrel while the WTI price is at US$39.75 a barrel.

But JPMorgan thinks there’s a real chance Brent could surge five-fold in a “bull case” scenario as it sees the oversupplied market swinging into undersupply scenario starting in 2022.

Why oil could surge higher

This isn’t seen as the most probable outcome by the investment bank. All the stars will need to align for oil before it can head towards the US$200 mark and JPMorgan’s base case scenario is for Brent to hit US$60 a barrel instead.

But Malek told CNN that he thinks it’s even more likely now than before COVID-19 that the bull case outcome becomes a reality.

He was bearish on oil since 2013 but is now predicting that a very large supply-demand deficit will emerge in 2022 that could reach 6.8 million barrels a day by 2025.

“The deficit speaks for itself. That implies oil prices will go through the roof,” he said. “Do we think it’s sustainable? No. But could it get to those levels? Yes.”

Investors in oil-exposed ASX stocks will be cheering him on.

More reading

• 3 long-term ASX 200 shares I’d buy right now
• Top brokers name 3 ASX 200 shares to sell next week
• Top brokers name 3 ASX 200 shares to buy next week
• Why the ultra-rich are hoarding gold
• 2 blue chip ASX 200 dividend shares to buy next week

Motley Fool contributor Brendon Lau 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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