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Why I would buy Rio Tinto and 2 other high yield ASX dividend shares

With the cash rate likely to go lower before going higher again, I think now is a great time to look to the share market for a source of income.

Especially given the high number of quality shares offering high yield dividends. Three I would consider buying are as follows:

Australia and New Zealand Banking Group (ASX: ANZ)

Investors that don’t already have exposure to the banks might want to consider a position in this banking giant. Its shares may have been strong performers in 2019, but they still offer an above-average dividend yield. Furthermore, due to its strong capital position, cost cutting opportunities, low bad debt charges, and overweight exposure to business lending, I believe it is well-positioned to grow its dividend this year. At present its shares offer a trailing fully franked 5.7% dividend yield.

Rio Tinto Limited (ASX: RIO)

If you’re comfortable with a little exposure to the resources sector then I think this mining giant would be a quality option for income investors. This is especially the case this week as Rio Tinto’s shares will trade ex-dividend on Thursday for its final and special dividends. Following the release of its strong full year result, the Rio Tinto board declared a fully franked final dividend of US$1.80 per share and a fully franked special dividend of US$2.43 per share. At the current exchange rate, these dividends offer investors a 6.2% yield.

Super Retail Group Ltd (ASX: SUL)

Another high yield dividend share that I would suggest income investors consider is Super Retail. The retail group behind retail brands including Rebel and Super Cheap Auto has been performing very well in FY 2019 despite the tough trading conditions being experienced by many in the sector. In the first half of FY 2019 the company posted an 8.9% increase in half year normalised net profit after tax to $81.6 million. The second half looks likely to be equally strong considering the strong sales growth it has achieved thus far. During the first six weeks of the second half the company achieved like for like sales growth of 4%. 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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