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Why I would buy Westpac and 2 other dividend shares this month

This afternoon the Reserve Bank of Australia met for the second time this year and kept the cash rate on hold at the record low of 1.5% for yet another month.

The central bank may not be keeping rates on hold for much longer, though, according to economists at Westpac Banking Corp (ASX: WBC).

Its team expects the central bank to make a 25 basis point cut in August and another 25 basis point cut in November. This would mean a cash rate of just 1% by the end of the year.

If this proves accurate then it could be a number of years until rates move to “normal” levels again.

In light of this, I think that investors ought to consider these generous dividend shares for their income needs:

Dicker Data Ltd (ASX: DDR)

On Monday this founder-led wholesale distributor of computer hardware and software released its guidance for FY 2019. Thanks to organic growth and the full year contribution from new vendors, management is confident its Australian business will continue its strong form this year. This is expected to lead to group revenue of $1.65 billion and net profit before tax of $51.4 million, which will be 10% growth on both the top and bottom lines. In light of this, Dicker Data expects to pay a full year dividend of 22 cents per share in quarterly instalments. This equates to a forward 6.1% yield at the current share price.

Wesfarmers Ltd (ASX: WES)

I think that this conglomerate could be a good option for income investors. Although its shares are now trading without the rights to its interim and special dividends, I believe it is well worth considering a long-term and patient investment. This is because I believe Wesfarmers is a stronger company after its portfolio restructure and is well-positioned for earnings and dividend growth over the coming years. I estimate that its shares will provide a dividend yield of approximately 4.7% over the next 12 months.

Westpac Banking Corp.

Rather than have money gathering only paltry interest in one of the banking giant’s savings accounts, I would suggest income investors consider investing these funds into its shares. After all, even after a strong share price rally in 2019, Westpac’s shares still offer a trailing fully franked 7% dividend yield at present.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Wesfarmers 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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