The Motley Fool

Smash low interest rates with these top dividend shares to buy

On Tuesday the Reserve Bank of Australia downgraded its GDP forecasts and admitted that it was going to take longer than previously expected for inflation to reach its target range.

In respect to the latter, Governor Lowe said: “The central scenario is for underlying inflation to be 2 per cent this year and 2¼ per cent in 2020.”

If this proves to be the case then I think it is inevitable that rates will be kept on hold for the entirety of 2019 and much of 2020.

While this is potentially good news for borrowers, it is bad news for savers that will have to contend with low interest rates on savings accounts and term deposits for some time to come.

Luckily for savers there are a large number of dividend shares on the Australian share market that offer yields that are vastly superior to those on offer from other interest-bearing options.

Three to consider buying this week are as follows:

Baby Bunting Group Ltd (ASX: BBN)

Although this baby products retailer’s shares only provide a trailing fully franked 2.5% dividend at present, I believe the significant reduction in competition in the industry has put the company in a position to increase it meaningfully this year. In fact, at its AGM management provided guidance that implied potential EBITDA growth of up to 45% in FY 2019. If the company increases its dividend in line with its earnings grow, I estimate that it will pay an 7.7 cents per share dividend. This work out to be a 3.7% forward yield at today’s price. I expect further increases in FY 2020 and beyond.

National Australia Bank Ltd (ASX: NAB)

One of my favourite options in the banking sector right now is National Australia Bank. I believe it is well-placed to deliver a strong result in FY 2019 thanks to its overweight exposure to a business lending market that is performing very well. I’m optimistic that this will allow the bank to maintain its $1.98 per share dividend this year and still meet its CET1 target. If this proves to be the case then it means NAB’s shares offer a forward fully franked 7.9% dividend today.

Rural Funds Group (ASX: RFF)

This real estate property trust owns a large number of rural properties across different geographies and farming industries. One key attraction to the trust for me is that it has high quality tenants with long-term tenancy agreements that have rental indexation built into them. I believe this puts the trust in a position to grow its distribution each year at a solid and predictable rate. At present its units offer a trailing 4.7% yield.

NEW! Analyst Names Best Dividend Picks for February

With interest rates likely to stay at rock bottom for months (or YEARS) to come, income-minded investors have nowhere to turn... except dividend shares. That’s why The Motley Fool’s top analysts have just prepared a brand-new report, laying out their top 3 dividend bets for 2019.

Hint: These are 3 shares you’ve probably never come across before.

They’re not the banks. Not Woolies or Wesfarmers or any of the “usual suspects.”

We think these 3 shares offer solid growth prospects over the next 12 months. The first two currently offer fat, fully franked yields. The last is a surprising REIT offering you the benefits of being a landlord with none of the hassle! You’ll discover all three names and codes in "The Motley Fool’s Top 3 Dividend Shares for 2019."

Even better, your copy is free when you click the link below. Fair warning: This report is brand new and may not be available forever. Click the link below to be among the first investors to get access to this timely, important new research!

The names of these top 3 dividend bets are all included. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.

Click here to claim your free copy right now!

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 National Australia Bank 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.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.