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Forget saving! Top up your income with these 2 ASX dividend stocks instead

The returns you can expect from saving your cash (even in a term deposit) have disappeared this year. Looking back at 2019, we can pinpoint this year as the year when returns from safe investments like cash went from low to negligible (or even negative if you factor in inflation).

And although the Reserve Bank of Australia (RBA) has already slashed interest rates 3 times in 2019, there’s a high chance we will go even lower in 2020 (cue limbo music).

The solution? It’s ASX dividend stocks for me. Income-producing shares remain one of the best ways to get a decent return in cash from your investments these days.

Here are 2 that I would consider for dividend income.

Australia and New Zealand Banking Group (ASX: ANZ)

ANZ (along with the other ASX banks) has been caught in a sentiment drift in the last few months, even as the broader market has pushed higher. Dividend/franking cuts, lower interest rates and ongoing regulatory issues continue to dog the banking sector – with Westpac Banking Corp (ASX: WBC)’s recent criminal allegations not exactly helping.

Still, ANZ shares today offer a very substantial starting yield of 6.54% – which grosses up to 8.51%, even with the 70% partial franking. That places ANZ at the upper echelons of high-yielding ASX shares and makes this company a worthwhile income stock in my view. Banking sentiment may be at a low, but (to me) ANZ’s dividend is looking more secure after the franking reduction.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Sydney Airport booked a new all-time high of $9.30 earlier this week, but SYD shares have pulled back somewhat over the last few days and are going for $8.98 at the time of writing. Thus, I think it might be a good time to jump into this income favourite.

Sydney Airport is generally regarded to be a more defensive company due to its monopolistic grip on air travel in Sydney, and NSW by extension. Our low dollar is also making travelling to Australia more attractive for residents of other countries, which has in turn has helped boost the number of tourists coming through Sydney Airport’s terminals.

On current prices, SYD shares are offering a robust yield of 4.30% (albeit with no franking credits attached), which might make a decent alternative to your term deposit!

Foolish takeaway

Having shares that produce a stream of dividend income is a lovely way to top up your cash flow, and I think these 2 ASX shares make fantastic candidates. On a pricing level, ANZ is certainly looking cheaper today, but SYD shares do tend to command a premium for the perceived ‘safety’ of the dividend.

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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. 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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