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Replace your term deposit with these 2 high-yield ASX dividend shares

Interest rate cuts used to be welcomed by most Australians – after all, who doesn’t want a cheaper home loan? But the Reserve Bank of Australia (RBA)’s move last week to cut the cash rate to a new record low of 0.75% was greeted with dismay by many people. It seems we can now kiss the usefulness of term deposits and savings accounts goodbye.

It’s a bleak time for retirees and other income investors – the portion of your portfolio that used to give low but safe returns is now almost impotent. That leaves dividend shares as the only conventional option (outside maybe property) for getting an income of more than 3% on your money.

So here are 2 ASX high-yield dividend shares that might be worth considering as replacements for your cash investments.

Scentre Group (ASX: SCG)

Scentre is a REIT (real estate investment trust) that owns the Westfield network of shopping centres in Australia and New Zealand. Although many other REITs like Goodman Group (ASX: GMG) have seen a significant uptick in interest as rates have fallen, Scentre remains unloved by investors – which I believe is due to investor scepticism about the future viability of physical retail. I think this may be misplaced – not every shop can be replaced with Amazon and eBay and I think people will continue to go to the shops for a haircut, mani-pedi and coffee or just a good old-fashioned browse for the foreseeable future.

Scentre shares are offering a 4.8% dividend yield on current prices.

Coles Group Ltd (ASX: COL)

In a similar vein, I also think Coles is a great choice for income investors today. I don’t think there’s any doubt that in 20 years’ time we will still be going to Coles for our groceries and household essentials (even if they’re being delivered to our door via drone). As a low-cost supermarket, Coles will always be one of the cheapest places to fill the pantry, and this defensive quality makes it a great stock to hold for income in good times and bad.

Coles is currently offering a forward yield of around 3.5% (fully franked) on current prices.

Foolish takeaway

I think these 2 ASX dividend shares would provide investors with a good, strong stream of income, perfect for replacing those useless term deposits. I like the Scentre price today a lot more than Coles, but both are well worth watching going forward.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. 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.