The S&P/ASX 200 Index (Index:^AXJO) is surging higher on encouraging news of a possible vaccine for COVID-19 and comments from US Federal Reserve head Jerome Powell on more stimulus.

It seems the Fed is not running out of juice to liquor-up financial markets, while Boston-based biotech Moderna announced better than expected early trial results.

If the bulls are right about the worst being over, it will have implications for the performance of the big four ASX banks.

Passing the baton

During the meltdown, it’s the Commonwealth Bank of Australia (ASX: CBA) share price that held up better than its peers. That’s understandable as investors are willing to cough up a premium during a crisis to hold the highest quality and safest domestic bank.

But if animal spirits are running wild, the tide will turn. Investors will be more aggressively turning to value buys and this means beloved CBA is likely to be left behind in the rebound.

The question then is which of the other three big banks will take the crown? There isn’t much difference in valuations of Australia and New Zealand Banking GrpLtd (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd. (ASX:NAB).

Best bank for the COVID-19 rebound

But NAB seems to be a hot favourite among some leading brokers. For instance, Goldman Sachs put the stock in its “conviction” buy list as NAB is its top pick in the sector.

The broker is bullish on the bank due to its dramatic improvement in operational performance in recent years and it sees better revenue potential given NAB’s bigger exposure to small and medium sized business lending.

Meanwhile, JP Morgan is also backing NAB in the four-horse race. While the bank reported a disappointing first half profit result recently, the broker believes it displayed the most resilient top-line if you excluded the bank’s underperforming Markets division.

Don’t discount CBA just yet

Coincidentally, both brokers rate CBA a “sell” due to its lofty valuation. I own shares in all the big four banks but remain overweight on CBA as I don’t believe we have seen the last of the coronavirus volatility.

Let’s not forget that CBA also continues to win market share for home loans despite its dominance in the sector.

Just as importantly, my experience tells me that its seldom premium valuations that really hurt my share portfolio performance. The real culprits are balance sheet and governance issues – factors that weigh more heavily on the other three.

Buy into NAB’s SPP

But I agree that NAB is likely to pull ahead of its peers if the skies are as blue as it appears today. If you share my belief that we have seen the worst of the coronavirus market meltdown and are happy to stomach the volatility, NAB looks enticing.

This is why I plan to participate in NAB’s share purchase plan, which closes this Friday. I doubt you can buy NAB shares lower than the $14.15 a share offer price again for a long time.

Just remember not to put all your eggs into one basket. It’s better to hold a few bank stocks for diversification.

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Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

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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I think Warren Buffett is one of the world’s best investors. Berkshire Hathaway doesn’t pay a dividend, but he likes to invest in shares that do pay a dividend. I think there are some ASX dividend shares that could be worth buying.

Here are some great income ideas that could be worth buying during these coronavirus times:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) 

Soul Patts is often described as the Australian version of Berkshire Hathaway. It invests in both listed and unlisted businesses & assets.

Some of the ASX shares that it’s invested in include TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and Clover Corporation Limited (ASX: CLV). Some of its unlisted investments include swim schools and agriculture.

Warren Buffett’s preferred holding period for shares is forever. I think Soul Patts is well placed to keep growing for decades to come and it has already been around for over 100 years.

As a bonus it has a grossed-up dividend yield of 4.7%. This dividend has increased every year since 2000. The dividend is purely funded by the investment income it receives, less expenses.

APA Group (ASX: APA) 

APA Group is an ASX energy infrastructure giant. I think Warren Buffett would really like this share because Berkshire Hathaway Energy is one of the US business’ biggest divisions.

It owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation’s natural gas usage.

APA is actually looking for opportunities in the US which would be a good way to strengthen and diversify earnings further.

The energy giant currently offers a distribution yield of 4.4%.

Duxton Water Ltd (ASX: D2O) 

I think Warren Buffett’s share choices and his previous comments show he likes investing in businesses that are ‘essential’ for western life like Apple, energy and insurance.

Water is an integral part of the agriculture process for farmers. Duxton Water provides access to water entitlements which can either be leased for multiple years or it can provide short-term access.

The amount of water that is now leased means Duxton Water’s board has been confident enough to project growing dividends for the next two years.

I calculate that based on the next 12 months of dividends the forward grossed-up dividend yield is 6.25%.

Which Warren Buffett ASX dividend share is best?

I think APA looks fairly priced now, so I wouldn’t call it a buy. Soul Patts is the one with the best dividend record and I believe it’s the one that’s most like Berkshire Hathaway. So Soul Patts would be the one I’d go for as a Warren Buffett ASX dividend share.

More reading

• 3 ASX shares to instantly diversify your portfolio
• 3 ASX 200 dividend shares I’d buy today
• These mid cap ASX shares could grow into large caps in the future
• 2 ASX dividend shares to rescue your income hopes
• Why I think it’s time to buy this ASX 200 share

Tristan Harrison owns shares of DUXTON FPO and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group. The Motley Fool Australia has recommended DUXTON FPO. 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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If you’re in retirement then you’ll no doubt be well aware of how difficult it has become to generate an income from term deposits and savings accounts.

Unfortunately, I suspect it could be many years before we see interest rates at levels that are sufficient to generate a liveable income from.

But don’t worry because there are a large number of shares on the ASX which I believe could be part of a successful retirement portfolio.

Two top dividend shares I think retirees ought to consider are listed below. Here’s why I like them:

Coles Group Ltd (ASX: COL)

I would argue that Coles is the best share for a retiree to own right now. This is due to its solid long term growth potential, generous dividend policy, and defensive qualities. The supermarket giant has displayed the latter this year with its strong sales growth during the pandemic. I’m not the only one that thinks Coles is a buy. A recent broker note out of Goldman Sachs reveals that it has Coles on its conviction buy list with an $18.60 price target. This implies potential upside of approximately 21% for its shares over the next 12 months. But just as good, the broker is forecasting a 65 cents per share fully franked dividend in FY 2021. This represents a 4.25% forward dividend yield.

Telstra Corporation Ltd (ASX: TLS)

Another top option for retirees to consider buying is Telstra. Like Coles, I think the telco giant has a lot of the qualities required for a spot in a retirement portfolio. It has defensive earnings, a generous dividend yield, and decent growth prospects. While the latter may be a couple of years away, I think Telstra could return to growth potentially as soon as 2022 when the NBN headwinds ease and its cost cutting takes full effect. In the meantime, I’m optimistic that its free cash flow will be sufficient to maintain its current dividend of 16 cents per share. Though, if a much-speculated cut to 14 cents per share is made in response to the pandemic, its shares will still provide an above-average yield. 16 cents per share equates to a fully franked 5.1% yield, whereas 14 cents per share would be a 4.5% yield.

More reading

• Is the Bega Cheese share price a strong ASX buy today?
• Forget term deposits and buy these top ASX dividend shares
• 2 ASX shares I would buy for growth and income
• Latest ABS data reveals how Australians are responding to COVID-19
• Why Macquarie, Telstra, United Malt, & Westpac are dropping lower

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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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