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Westpac expects the cash rate to fall to 0.25% in 2020

Price cut

Last week the Reserve Bank kept the cash rate unchanged at 0.75%.

But unfortunately for income investors, a growing number of economists are predicting that it won’t be long until the central bank takes rates lower again.

According to the latest Westpac Banking Corp (ASX: WBC) Weekly economic report, it is forecasting two rates cuts in the near future.

The bank expects this to happen by June 2020, bringing the cash rate down to 0.25%.

As this is likely to put pressure on the interest rates on offer with term deposits and savings accounts, I think income investors would be best putting their money into ASX dividend shares. 

Three ASX dividend shares I would buy for 2020 are listed below:

BWP Trust (ASX: BWP)

BWP is a real estate investment trust and landlord to hardware giant Bunnings. In FY 2019 it posted like-for-like rental growth of 2.3%, which allowed the BWP board to increase its distribution by 2% to 18.1 cents per unit (excluding its special dividend). Pleasingly, it is confident that it will be in a position to increase its distribution further in FY 2020. At present its units offer a trailing 4.3% distribution yield.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Thanks to its position as the main gateway into and out of Australia, increasing international tourism, and its strong pricing power, Sydney Airport has grown its dividend at a solid rate over the last few years. The good news is that I expect this trend to continue in FY 2020, potentially making it a great option for income investors. At present Sydney Airport’s shares offer a trailing 4.2% dividend yield.

Telstra Corporation Ltd (ASX: TLS)

A final dividend share to consider buying is Telstra. I’ve been very impressed with the early success of its T22 strategy and the significant costs it has already cut. Two more positives are the NBN rollout nearing completion and the arrival of 5G internet. Overall, I believe the future looks a lot brighter for the telco giant and feel it is well-positioned for a return to earnings and dividend growth in the near future. Its shares currently offer a trailing 4.3% dividend yield.

These 3 stocks could be the next big movers in 2020

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited and Telstra 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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