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Why I would buy ANZ and these high yield ASX dividend shares

As I mentioned here at the weekend, economists continue to believe that rates will go even lower in the very near future.

This is great news for borrowers, but a bit of a disaster for savers and income investors.

The good news for the latter group is that there is a plethora of shares on the Australian share market that pay dividends that provide vastly superior yields.

Three dividend shares I would consider buying are listed below:

Australia and New Zealand Banking Group (ASX: ANZ)

I think that ANZ would be a good option for income investors that don’t already have meaningful exposure to the banking sector. Especially given how trading conditions could be about to improve for the banks thanks to APRA’s decision to loosen lending rules and the housing market showing signs that a rebound could be coming. This, combined with ANZ’s attractive valuation and exposure to business banking, makes it my favourite option in the space. At present the bank’s shares offer a trailing fully franked 6% dividend yield.

Scentre Group (ASX: SCG)

Scentre is the owner of the Westfield properties in the ANZ region and one of my favourite dividend options. In the first half of FY 2019 the company reported a 3% increase in funds from operations (FFO) and a 5% increase in earnings thanks partly to strong demand for its properties. This led to the company finishing the period with an impressive occupancy rate of 99.3%. The good news is that management expects a similarly positive second half and has forecast FFO per security growth of approximately 3%. It also plans to pay a final distribution of 11.3 cents per security, which equates to a 5.7% yield on an annualised basis.

Telstra Corporation Ltd (ASX: TLS)

Earlier this month Telstra delivered a full year result which was in line with both its guidance and market expectations thanks to the early success of its T22 strategy. It also revealed that it is now halfway through the negative impact of the nbn rollout, which means that the end is finally in sight. Once this headwind is removed, I expect Telstra will be well-placed to return to growth again. But in the meantime, I’m confident that its cash flows will be sufficient enough to support its current dividend. Which could make it a good time to snap up shares for their fully franked 4.3% 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 Scentre 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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