Dividends are fast becoming the raison d’être of many investors previously loath to exposing a significant chunk of their wealth to the whims of the share market. The ability of other assets to pay a nice and consistent yield on cost is becoming rarer and rarer as the Reserve Bank of Australia (RBA) takes us into unknown territory with interest rates.
Savings accounts and term deposits are impotent – and even property yields are being bid to record lows. That leaves dividend shares as the best option for getting a real return on one’s assets.
So, here are my top 3 ASX dividend picks for generous income today.
Scentre Group (ASX: SCG)
Scentre is a REIT (real estate investment trust) that owns the Australian and New Zealand arm of the old Westfield Corporation. Shopping centres have not been the most popular asset in today’s world of ecommerce and online shopping, but Scentre (I think) has shown it can find a path to prosperity in this challenging landscape.
With a focus on ‘experiences’ like dining and cinemas, Scentre’s Westfield malls have maintained a consistent occupancy rate and foot traffic – helping the company to offer a current (and generous) 4.92% distribution yield today.
Commonwealth Bank of Australia (ASX: CBA)
The largest bank and company on the ASX, CBA needs no introduction. I think CommBank is the best pick of the ASX banks today – strong brand loyalty and huge economies of scale have rewarded shareholders handsomely over the past two decades and I think this trend will continue well into the future. CBA shares are today offering a lucrative 5.41% dividend yield (7.73% grossed-up), which beats the pants off most dividend shares (not to mention CBA’s own term deposits).
Woolworths Group Ltd (ASX: WOW)
Although the Woolworths dividend isn’t too impressive on paper (currently at 2.71%), I think having exposure to a recession-resistant company like Woolworths is very beneficial to a dividend portfolio. Unlike other dividend payers like CBA or BHP Group Ltd (ASX: BHP), Woolworths is unlikely to suffer a big dip in earnings if tough economic times do hit (we all need to eat after all).
I also think that the plans to spin-off Woolworths’ drinks business will also be of benefit to shareholders in the future – and a possible new source of dividend income to boot.
With these 3 ASX dividend shares, I think you will have a solid foundation for a generous income portfolio. I particularly like the Scentre share price at today’s levels, but CBA shares aren’t looking too expensive either.
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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.