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3 of the best ASX dividend shares to beat cash returns

With the Reserve Bank of Australia again lowering interest rates on Tuesday to a record-low 1%, income from anything outside shares and property is near impossible to find.

This will only intensify going forward, with banks like Westpac Banking Corp (ASX: WBC) set to annihilate any inflation-matching rates on savings accounts and term deposits if they haven’t done so already. Things are probably going to get worse before they get better too, with most experts predicting more cuts by the end of the year.

So if we are forced to invest in shares for any kind of substantial return, we had better make sure the shares are good quality dividend payers. Here are three ASX dividend shares that (in my opinion) fit the bill.

South32 Ltd (ASX: S32)

South32 is the mining company that was spun-off from BHP Group Ltd (ASX: BHP) in 2015. South32 is a relatively diversified miner, which is why I find it appealing as an income share. South32 earns a crust from mining aluminium, manganese, nickel, silver and lead, which is a nice change from the iron miners like BHP that dominate the ASX. South32 is currently paying a fully franked dividend of 6.27% (grossed-up) on current prices, making it a good income stock for the current times (in my opinion).

Coles Group Ltd (ASX: COL)

Coles is our second-largest grocery supermarket chain and a company that has a highly reliable earnings base thanks to its ‘down, down’ prices. This means that no matter the economic weather, Coles is going to keep making sales – we all have to eat, drink and buy toothpaste, after all. Coles has yet to pay a dividend, but management has said that the company is aiming to payout at least 80% of earnings. This should give Coles’ dividend a yield of around 4% (by my calculations) when it does eventuate.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

‘Soul Patts’ is one of the best dividend stocks on the ASX, with the company raising its payout every year since 2000 (even during the global financial crisis). Soul Patts was founded way back in 1872 in Sydney and still runs out of the same Pitt St headquarters that it was founded in! However, the company has gradually shifted into more of an investment focus in recent years, and now invests in other quality ASX companies like TPG Telecom Ltd (ASX: TPM), Milton Corporation Limited (ASX: MLT) and Brickworks Limited (ASX: BKW). SOL shares currently pay a 3.69% fully franked dividend yield (grossed-up).

Foolish takeaway

These companies are all quality investments that will continue to pay a healthy income going forward (in my opinion). Any would make a great addition to your income portfolio going forward, particularly if you’d like some diversification away from the big banks like Westpac.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Brickworks and Washington H. Soul Pattinson and Company 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.