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Should income investors buy ANZ, Coles, or Telstra shares?

Later today the Reserve Bank of Australia will meet to decide on the cash rate.

Whilst the general consensus is that the central bank will keep rates on hold at 1%, it appears to be only a matter of time until it does take rates lower.

In light of this, if you haven’t done so already, I think now would be a good time to switch out of savings accounts or term deposits and into one of these top dividend shares.

Here’s why I like them:

Australia and New Zealand Banking Group (ASX: ANZ)

Whilst all the big four banks could arguably be in the buy zone right now, I think one of the best options in the industry is ANZ. This is due to its attractive valuation, exposure to business banking, and generous yield. At present ANZ’s shares offer investors a trailing fully franked 6% dividend yield, which is amongst the best on offer in the industry. Another positive is that with the housing market improving, demand for home loans could soon be on the rise and support its profits and dividend over the medium term. Just as long as it can maintain or improve its market share which has been slipping recently.

Coles Group Ltd (ASX: COL)

I think this supermarket giant would be another quality option for income investors. I believe Coles is well-placed to grow its earnings and dividend at a solid rate over the next decade thanks to its positive sales outlook and potential margin expansion from its focus on automation. This focus is expected to cut costs materially and make the company significantly more efficient. At present Coles’ shares provide an estimated FY 2020 fully franked 3.9% dividend yield.

Telstra Corporation Ltd (ASX: TLS)

A final option to consider is this telco giant. Whilst the company has cut its dividend materially in recent times, I believe it has finally fallen to a level that is sustainable with its current cash flows. Especially with the end of the nbn pain finally in sight for Telstra after it reached the halfway point of the rollout. Once this headwind is removed, I believe Telstra will be well-placed to return to growth again. At present Telstra’s shares offer investors a fully franked 4.4% 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. 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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