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Replace your term deposit with these ASX dividend shares

According to the latest cash rate futures contracts, the market has priced in a cash rate cut to 0.5% by April of next year.

Unfortunately, this mean the interest rates on offer with term deposits could fall further in the near future.

In light of this, I would consider replacing your term deposit with one of these quality dividend shares. Here’s why I like them:

BWP Trust (ASX: BWP)

I think BWP Trust could be a good alternative to term deposits. Whilst its name may not be familiar, the majority of readers will have stepped foot in one of its properties. This is because it is a real estate investment trust which generates the majority of its income as the landlord of hardware giant Bunnings. Due to the quality of its tenants and periodic rental increases, I believe it is well-placed to grow its distribution at a solid rate for a long time to come. At present its shares provide an estimated forward 4.2% distribution.

Coles Group Ltd (ASX: COL)

Another top option for income investors is Coles. I think the supermarket operator is a great buy and hold investment option due to its positive long term growth outlook and generous dividend policy. In respect to the latter, Coles intends to pay out 80% to 90% of its earnings to shareholders. Based on this, I estimate that its shares currently provide a fully franked forward 3.7% dividend.

Transurban Group (ASX: TCL)

Transurban is one of the world’s leading toll road operators. It has roads in both North America and Australia that are all high quality and continue to report increasing traffic numbers. This, combined with toll road price increases, has led to Transurban growing both its income and distribution at a solid rate over the last decade. I expect this and recent acquisitions and developments, to underpin further growth over the next decade. This year management plans to increase its distribution to 62 cents per security, which equates to a forward 4.2% forward yield.

Finally, as well as Transurban, I think these dividend shares are amongst the best on offer on the market today.

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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 Transurban 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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