According to a note out of Macquarie Group Ltd (ASX: MQG), its analysts don’t expect the Reserve Bank of Australia to raise interest rates until 2020.
This is quite a shift for the bank, as it wasn’t too long ago that it was quite hawkish on Australian interest rates.
However, its economists don’t believe the economy is growing fast enough and have pointed to Australia’s reasonably high unemployment as a concern. This labour market slack is likely to restrict wage growth and limit inflation.
I agree with this view and would be very surprised to see the Reserve Bank move rates higher next year.
Because of this, investors may want to consider looking at dividend shares for a source of income instead of savings accounts and term deposits.
Two that I would consider buying next week are listed below:
Dicker Data Ltd (ASX: DDR)
This computer software and hardware wholesale distributor would be a great option for income investors in my opinion. Not only does it have a robust and growing business run by founders with plenty of skin in the game, its generous dividend is paid in quarterly instalments. This year Dicker Data intends to grow its annual dividend by 7% to 18 cents per share, which equates to a fully franked 6.2% dividend.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
As the main gateway into Australia, Sydney Airport is benefitting greatly from Australia’s inbound and outbound tourism boom. I believe this boom has put the airport operator in a great position to grow at a steady rate for the foreseeable future. While I do have slight concerns over its status as a bond proxy, I’m optimistic that its positive long-term outlook will be enough to keep investors onboard. At present the company’s shares offer investors a trailing 4.8% yield.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Sydney Airport Holdings 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.