ASX shares have traditionally not been the investment of choice for the ‘conservative’ investor. As shares are one of the most volatile assets to own, capital-conscious investors have typically been more attracted to ‘safer’ investments like cash, term deposits or government bonds.
But these days, with interest rates at record lows, alternatives to dividend paying shares are scarcer than ever in the hunt for yield.
So here are 2 ASX dividend shares that I think offer some of the safest yields on the markets today.
Transurban Group (ASX: TCL)
Transurban owns and operates many of the largest toll roads around the country. I think Transurban is a fantastic company as most of its roads are major arterial routes that are very difficult to avoid, especially those in Sydney and Melbourne. This gives Transurban a literal ‘toll moat’.
Toll roads are also very inelastic services – meaning demand isn’t likely to fluctuate during economically tough times. All of these business traits point to a company with a rock-solid earnings base, which in turn indicates a rock-solid dividend.
TCL shares are currently paying out a 3.82% yield.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
With one of the most self-explanatory company names on the ASX, you know exactly what you’re getting with Sydney Airport stock. What I really like about Sydney Airport is its monopolistic grip on the airways of NSW. In its prime Mascot location, every person entering or leaving NSW by air is forced to use Sydney Airport’s services, and the company is able to charge pretty close to what it likes for this privilege.
That’s how Sydney Airport has been able to deliver consistent dividend pay rises to its shareholders since 2010. For its unbeatable location, monopolistic grip on NSW air travel and and the inelastic nature of airport services, I consider Sydney Airport one of the safest dividend shares on the ASX today. SYD shares offer a starting yield of 4.18% on current prices.
Whilst nothing is certain in life or investing, I personally consider Transurban and Sydney Airport as having some of the safest dividends you can get on the ASX today. Whilst only bonds offer a truly guaranteed dividend, I can’t think of any better bond proxies than these 2 ASX shares.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited and 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.