With November right around the corner, speculation is rife whether the Reserve Bank of Australia (RBA) will cut interest rates once more for the year when it meets on Melbourne Cup day. Regardless if the cash rate goes to 0.5% or stays at its current level of 0.75%, the outcome is still bleak for savers and cash holders.
After all, your 1.5% savings account interest rate is pretty much balancing out inflation, so if it goes to 1.25% next week, I’m afraid it’s all over for real cash returns.
That’s where dividends shares come in. The ASX has many dividend-paying companies that offer yields well over what you can get anywhere else at the moment. Although shares are much more volatile than cash, choosing the right ones can mean great benefits for your long-term wealth.
Here are 2 ASX dividend shares that I think are worth a closer look.
AGL Energy Ltd (ASX: AGL)
AGL is one of the largest non-public providers of electricity and gas in the country – owning both generation assets (power plants) and a retail business. Power and gas are highly inelastic goods/services, meaning that demand is relatively consistent regardless of the economic climate.
Thus, I see AGL’s defensive qualities as worthy of an investment – especially considering AGL has a trailing dividend yield of over 6%. Despite what happens over the next decade or two, I don’t see our need for electricity and gas going anywhere, and so I think AGL would be a great core stock to hold in a dividend portfolio.
WAM Research Ltd (ASX: WAX)
WAM Research is a listed investment company that specialises in investing in small- to mid-cap ASX companies that show growth potential. It has returned an average of 16.7% to its shareholders since 2010, and currently offers a massive dividend yield of 6.5%, which grosses up to 9.28% including franking.
Such performance matched with this massive dividend makes this company well worth including in an income portfolio, in my view.
Both of these shares would prove to be great dividend stocks to buy and hold for income, in my view. Although both companies do not come cheap on today’s prices, sometimes in these high markets you have to pay a premium for quality yield.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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