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2 ASX dividend shares with yields over 7%

With the Reserve Bank of Australia (RBA) leaving rates on hold this month, many retirees would be feeling a sense of relief. Term deposits, bonds and other ‘safe’ investments are already yielding historically record low levels, and another RBA cut would have seen things become even bleaker.

Unfortunately, we don’t seem to be out of the woods though. Even though rates have stayed at 0.75%, many economists are still predicting a February rate cut in 2020, which would leave the cash rate at an all-time low of just 0.5%.

Rather than hoping that the status quo is at least upheld, it might be prudent to consider some ASX dividend shares instead. Here are 2 such shares that offer yields over 7% – enough to beat the pants off any term deposit out there (and handsomely too).

Commonwealth Bank of Australia (ASX: CBA)

CBA shares seem to be the income investor’s new best friend. CommBank is now the only ASX bank not to have delivered a dividend or franking cut to its shareholders this year.

Our biggest bank’s payout has remained steady in a sea of red – and offers investors a starting yield of 5.45% today (or 7.79% grossed-up). That’s almost 5 times as much as a CBA term deposit will net you today. Thus, I think CommBank remains a powerful dividend stock to own today, despite the medium-term threats the banking sector faces.

WAM Capital Ltd (ASX: WAM)

WAM Capital is a listed investment company (LIC) specialising in ‘undervalued’ ASX stocks in the mid-cap space. WAM Capital has delivered a solid history of performance, returning an average of 16.9% per annum since its founding in 1999. By finding cheap stocks and holding them until the market prices them correctly, WAM is able to build a profit reserve from which it pays a rising dividend.

Today, that dividend is worth a 6.8% yield (or 9.7% grossed up). Whilst this dividend is contingent on WAM continuing to be successful in its stock picking, I still think its long history of excellence proves that its management knows how to choose a winner. Thus, I think WAM Capital is a solid buy for dividend income today.

Foolish takeaway

With these ASX shares yielding dividends above 7%, I think we have 2 choices that would be well worth investing in for income today. Both offer yields far in excess of cash, and no matter what happens with the share market, will continue to deliver high dividend income going forward, in my opinion.

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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.