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Westpac and these ASX dividend shares smash low interest rates

Dividend shares continue to be very popular with investors and this isn’t surprising when you consider term deposits and savings accounts are offering rock bottom interest rates right now.

And with rates expected to drop to even lower levels in the near term, I think dividend shares are still a great option for risk-tolerant investors who want to generate stronger returns over the medium term.

With that in mind, here are three shares that income-seeking investors might want to take a closer look at this month:

Coles Group Ltd (ASX: COL)

I think that this supermarket giant would be a great option for income investors due to its defensive qualities, positive long-term outlook, and favourable dividend policy. The latter will see the company pay out 80% to 90% of its earnings to shareholders. And with rational competition returning to the supermarket industry and the company focusing on reducing costs materially through the use of automation, I suspect that its dividends could grow at a solid rate over the next decade. I estimate that Coles’ shares currently provide a forward fully franked 3.6% dividend yield.

Super Retail Group Ltd (ASX: SUL)

Super Retail is the retail group behind brands including Macpac, Rebel and Super Cheap Auto. Despite tough trading conditions, it was a strong performer in FY 2019 and delivered a 7% increase in full year profit. This allowed the company to increase its dividend to 50 cents per share fully franked, which equates to a 5.1% dividend yield at present. Another positive is that management advised that it has had a solid start to FY 2020, which could mean another year of solid growth for the retailer.

Westpac Banking Corp (ASX: WBC)

If you’re looking for exposure to the banking sector then I think Westpac would be worth considering. I like Westpac due to its attractive valuation and very generous dividend yield. And while trading conditions continue to be tough for the banks, I am optimistic that things will get better in the near term due to recent improvements in the housing market. A rebound in house prices could lead to stronger mortgage loan growth and underpin modest earnings and dividend growth over the coming years. At present its shares offer a trailing fully franked 6.35% dividend yield.

But if you're not a fan of Westpac or the banks then these dividend shares could be the ones for you.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of Super Retail Group 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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