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Why I would buy ANZ and these ASX dividend shares in May

With the cash rate at a record low and tipped by many to go lower as soon as next month, I think savers would be better off putting their money to work in the share market than leaving it to gather only paltry interest in a savings account.

Especially given the large number of quality dividend shares that offer yields which are vastly superior to anything you’ll receive from savings accounts or term deposits.

Three dividend shares I would buy next month are listed below:

Adairs Ltd (ASX: ADH)

Adairs is one of Australia’s largest homewares retailers with a total of 166 stores. Despite the housing market downturn the company has continued to perform well and reported a 10.6% increase in sales to $164.4 million and a 9.1% lift in net profit after tax to $14.9 million in the first half of FY 2019. Pleasingly, the company started the second half strongly and looks set to deliver a solid full year result in August. I believe this will allow Adairs to increase its dividend again, making its trailing fully franked 7.8% dividend yield even more attractive.

Australia and New Zealand Banking Group (ASX: ANZ)

My favourite option in the banking sector right now is ANZ. I believe its strong capital position and cost cutting opportunities means the bank’s dividend is not only sustainable but could be complemented with capital management initiatives such as share buybacks or special dividends. At present its shares offer a trailing fully franked 5.8% dividend yield. Though, it is worth noting that the bank is due to release its half year result imminently, so it might be prudent to hold out for this release before investing.

Transurban Group (ASX: TCL)

I think this toll road giant is a great option for income investors. Transurban is one of the world’s largest toll road operators with a portfolio of roads in Melbourne, Sydney, Brisbane, and North America. Thanks to steadily growing traffic numbers and toll prices, Transurban has been able to grow its distribution at a solid pace over the last decade. I expect this to remain the case for the foreseeable future, potentially making it a great buy and hold option. At present its units offer a distribution yield of 4.2%.

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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 Transurban Group. 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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