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3 ASX blue chip shares with sustainable dividends for 2016

Low interest rates make it tough for savers to make a decent return on their cash. With the cash rate currently sitting at just 2%, some might even be losing net wealth each year once taxes (on the interest earned) and inflation come into play.

The problem is, some experts are predicting interest rates will fall even further in 2016, possibly to a low of just 1.5%. By contrast, a number of ASX-listed companies are offering returns two or even three times that amount in dividends alone.

While that might include big-name companies like BHP Billiton Limited (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA), I personally don’t think they’re the best dividend-paying shares to buy for 2016.

Waning global demand for resources is crushing commodity prices, impacting the miners, while the big four banks are facing tougher regulations which could hinder their returns as well.

Three ASX shares with sustainable dividends for 2016

Although most investors typically focus their attention on those traditional blue chip shares, there are a number of others which don’t receive anywhere near as much attention, yet could still be great investments over the coming years.

Transurban Group (ASX: TCL) is one such company. The company owns and operates a number of toll roads in Australia and the United States, providing critical infrastructure which should become even more important as the population grows. At its current price, the shares are trading on a partially franked yield of 3.8% which should continue to expand over the coming years.

Travel agency Flight Centre Travel Group Ltd (ASX: FLT) could also be a great company for dividend investors to consider. With a huge cash balance and plenty of room left to expand, the company’s shares are trading on a forecast 4% dividend yield, fully franked.

Retail giant Wesfarmers Ltd (ASX: WES) could also be a solid pick up for investors focused on the ultra-long term. The company, which owns businesses such as Coles, Bunnings, Officeworks and Kmart, has a long history for growing earnings and dividends and, after falling away in 2015, could be a good opportunity for investors to buy. The shares are trading on a forecast 4.8% fully franked dividend yield, which grosses to 6.9%.

Each of the companies mentioned above could make for great additions to your portfolio for 2016, and could generate a stream of income for years to come. Before you consider adding any of them to your portfolio however, our top analysts think there is an even better dividend share to own in the New Year...

Get The Motley Fool's #1 Dividend Share for 2016 -- FREE!

Forget BHP and Commonwealth Bank. This "dirt cheap" company. is growing like gangbusters, and trading on a 5.6% dividend yield, FULLY FRANKED (8% gross). With interest rates set to stay at these low levels for years to come, for income-hungry investors, including SMSFs, this ASX company could be the "Holy Grail" of dividend plays for 2016.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

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 Bruce Jackson.

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