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Why I would buy Telstra and these ASX dividend shares

Given the bleak outlook for rates in Australia, it certainly is fortunate that the share market has a large number of quality dividend shares offering generous dividend yields.

Three that I would consider buying this week are listed below. Here’s why I like them:

Adairs Ltd (ASX: ADH)

I think this home furnishings retailer’s shares are trading at a very attractive level which offers income investors a compelling risk/reward. Especially given how Adairs has been a solid performer in FY 2019 despite the tough retail trading conditions and housing market downturn. Pleasingly, with its online sales growing strongly, its loyalty program bearing fruit, the housing market tipped to rebound next year, and consumer spending expected to increase following tax cuts, I believe Adairs is well-positioned for further growth in FY 2020. At present, the company’s shares offer investors a trailing fully franked 7.7% dividend yield.

Aventus Group (ASX: AVN)

Aventus Group is a fully integrated owner, manager, and developer of large format retail centres. It owns a a portfolio of 20 sites across Australia. The vast majority of its tenants are national retailers, which represented 86% of the total portfolio at its last update. Thanks to its high occupancy rate, periodic rental increases, and quality tenants, I feel Aventus is well-placed to continue increasing its distribution at a modest rate over the long-term. Its units currently provide a trailing 6.9% distribution yield.

Telstra Corporation Ltd (ASX: TLS)

I think this telco giant could be worth considering thanks to its above-average dividend yield and the promising start it has made with its key T22 strategy. That strategy includes significant cost savings and productivity benefits which look set to offset weakness in other areas of its business. Combined with the launch of 5G and the return of rational competition in the telco market, I believe this could lead to Telstra returning to modest underlying growth in FY 2020. Based on the assumption that Telstra cuts its final dividend to 8 cents per share, I estimate that its shares currently offer a forward fully franked 4.2% dividend 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 and has recommended Telstra Limited. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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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