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3 top ASX dividend shares to replace your term deposit

Although the Reserve Bank of Australia (RBA) left interest rates on hold yesterday, there’s still no relief for anyone who likes to keep a substantial amount of their wealth in cash. No matter where you turn, the truth is that no cash instrument (whether it’s a savings account or a term deposit) really offers an inflation-beating interest rate return in the current environment.

That’s where dividend shares come in. ASX dividend-paying shares can offer you a return that’s often more than triple what you can get from a term deposit.

Here are 3 ASX dividend shares that I think are worthy of consideration to replace your cash investments.

InvoCare Ltd (ASX: IVC)

InvoCare is the largest funeral provider in the country, owning a range of funeral/crematoria brands such as White Lady Funerals, Le Pine Funerals and Simplicity. I like this business as it operates in an industry that is (unfortunately) always going to have demand. IVC shares are today trading for $13.12 –  in the middle of their 52-week range after sliding back from the $16.70 levels we saw earlier this year. On today’s prices, IVC shares offer a solid dividend yield of 2.8%.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is one of the largest employers in Australia – owning the Bunnings network of hardware stores, as well as Target, Kmart, and Officeworks chains and a 15% stake in Coles Group Ltd (ASX: COL). Such a wide range of well-run business gives this company a highly diversified earnings base and enables Wesfarmers to pay a solid dividend, which I estimate will come in around 4% for FY20 on current prices.

National Australia Bank Ltd (ASX: NAB)

Everyone knows that the big banks offer huge dividend yields and NAB is no different. However, NAB did surprise investors earlier this year when it slashed its $1.98 per share dividend back to $1.72 per share.

Even after this cut, NAB is offering a yield of 6.54% on today’s prices (which scales up to 9.34% if franking is included). Now its dividend has been dropped to a (hopefully) more sustainable level, I think it is a compelling buy for income today.

Foolish takeaway

With these three ASX dividend shares, you can put your impotent term deposits to work and have some inflation-beating dividend yields working for you. Wesfarmers is still looking a little pricey on today’s market but in my view, NAB and InvoCare both offer some value for money on current prices.

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Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia owns shares of National Australia Bank Limited and Wesfarmers Limited. The Motley Fool Australia has recommended InvoCare 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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