Should you buy Telstra and these ASX dividend shares next week?

Should income investors buy Telstra Corporation Ltd (ASX:TLS) shares and two others for their dividends?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With an average dividend yield of almost 4%, the Australian share market is one of the most generous in the world. Which certainly is good news for income investors in this low interest rate environment.

Three dividend shares that offer above-average yields are listed below. Here's why I like them:

Dicker Data Ltd (ASX: DDR)

One of my favourite dividend shares for some time has been this distributor of information technology products. It has been growing at a strong rate over the last few years, which has allowed its board to increase its dividend materially. The good news is that FY 2019 looks set to be another record year for the company following a strong first quarter which saw the company post a 21.1% increase in revenue to $386.9 million and a 46.7% lift in profit before tax to $13.5 million. Despite its shares rallying strongly on the news, they still offer a forward fully franked 4.6% dividend yield.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

With rates set to stay lower for longer, I think this "bond proxy" would be a great option for income investors. Bond proxies are shares that are expected to offer predictable returns over a long period of time, much like a traditional bond. I believe Sydney Airport is well-placed to achieve this thanks to the global tourism boom and its position as the main gateway into Australia. The airport operator's shares currently offer a trailing 4.9% dividend yield.

Telstra Corporation Ltd (ASX: TLS)

A final dividend share to consider buying is this telco giant. I think the decision by the ACCC to block the TPG-Vodafone Australia merger is a big positive for Telstra and will allow it to entrench its first mover advantage in 5G. In addition to this, I feel cost cutting opportunities and its improved performance means its dividend is sustainable at 16 cents per share. This equates to a fully franked 4.6% dividend yield based on its last close price.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited, Sydney Airport Holdings Limited, TPG, and Telstra 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.

More on ⏸️ Dividend Shares

A boy hold money and dressed in business suit next to money bags on a desk, indicating a dividends windfall
⏸️ Dividend Shares

The Accent (ASX:AX1) dividend has lifted by 22%

The company will reward shareholders with an increased dividend...

Read more »

a woman sits in the driver's seat of a car with her arm resting on the door with a small smile on her face, looking out of the car.
⏸️ Dividend Shares

Carsales (ASX:CAR) share price records a modest rise on dividend slash

Australia's largest online automotive and marine classifieds business notches a conservative share price rise on its latest report.

Read more »

A young entrepreneur boy catching money at his desk, indicating growth in the ASX share price or dividends
Bank Shares

ASX 200 bank shares to follow suit after CBA dividend hike: expert

Dividend investors rejoice! This expert expects more dividends to come from ASX 200 bank shares...

Read more »

sad looking petroleum worker standing next to oil drill
Share Fallers

AGL (ASX:AGL) dividend slashed. Share price down 3% on Thursday

More headwinds for the energy giant as its dividend is now in the spotlight.

Read more »

A girl looks through a microscope at money.
⏸️ Dividend Shares

The ANZ (ASX:ANZ) share price has only gained 10% in 5 years. But have the dividends paid off?

We do the math to see if it has been worth investing in ANZ shares over the long term...

Read more »

man laying on his couch with bundles of money and extremely ecstatic about high dividend returns
⏸️ Dividend Shares

The NAB (ASX:NAB) share price is flat 5 years on. But have the dividends paid off?

We calculate if it has been worth investing in NAB shares over the long run...

Read more »

two children dressed in business attire with joyous, wide-mouthed expressions count money at a desk covered in cash and sacks of money either side.
⏸️ Dividend Shares

Top-10 ASX dividend share delivers market-thumping share price gains

The Holy Grail for income stocks is to return strong capital gains as well

Read more »

happy woman looking at her laptop with notes of money coming out representing financial success and a rising share price and dividend yield
⏸️ Dividend Shares

Mining shares in the ASX 200 might unearth US$26b worth of dividends

Are shareholders about to dig some dividends?

Read more »