Beat low interest rates with these high yield dividend shares

On Tuesday the Reserve Bank of Australia will meet and decide on the cash rate.

Whilst at this meeting the general consensus is that the central bank will hold rates at the record low of 1.5% once again, a growing number of economists are predicting that rates will go lower in the coming months.

Whilst this would be good news for borrowers, it will be very disappointing for savers and income investors.

But thankfully there are a large number of quality dividend shares offering generous yields on the local share market right now. Two which I think would be great options are as follows:

Rio Tinto Limited (ASX: RIO)

Last week this mining giant released its full year results which came in largely ahead of the market’s expectations. The combination of this strong result, its robust balance sheet, positive outlook, and high levels of free cash flow allowed the Rio Tinto board to declare a final dividend of US$1.80 per share and a special dividend of US$2.43 per share. Both dividends are fully franked and equate to approximately A$5.97 at the current exchange rate. These two dividends alone provide a 6.3% yield at the current share price. Its shares will trade ex-dividend on March 7, so there’s still time to snap them up. Incidentally, fellow mining giant BHP Group Ltd (ASX: BHP) trades ex-dividend on the same day for its ~77 cents per share interim dividend.

Super Retail Group Ltd (ASX: SUL)

I think the shares of this retail group could be a great option for income investors. The company behind retail brands such as Super Cheap Auto and Macpac recently posted an 8.9% increase in half year normalised net profit after tax to $81.6 million. Pleasingly, Super Retail has had a strong start to the second half and reported like for like sales growth of ~4% for the first six weeks of the half. If it can carry this form through to the end of the financial year then it is likely to lead to another strong profit result and put its board in a position to increase its dividend. At present Super Retail’s shares offer a trailing fully franked 6.7% 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 Super Retail Group 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.

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