One of the big macro-economic trends of this year has been record low interest rates. The Reserve Bank of Australia (RBA) has cut the cash rate 3 times in 2019 to a record low of 0.75%. This has mirrored cuts from the US Federal Reserve as well as other central banks around the world. Ultra-low interest rates means traditional interest-bearing 'safe' investments like term deposits yield barely more than the approval receipt they're printed on.
That's why I think ASX dividend shares are a much better investment for passive income today. Here are three that I'm looking at right now.
Commonwealth Bank of Australia (ASX: CBA)
CommBank has escaped the kind of negative sentiment that has been weighing down its big four cousins of late. Whilst National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) shareholders have had to deal with ongoing criminal accusations, dividend cuts and potential capital raises (real in Westpac's case) – CBA has managed to stay relatively squeaky clean this year.
Thus, I think CBA's dividend yield of 5.26% on current prices (7.5% grossed-up) is a good option to consider for dividend income today.
Brickworks Limited (ASX: BKW)
Brickworks is one of those 'steady-as-she-goes' kind of companies. It has a diversified earnings base, which includes its brick manufacturing business (shock horror), rental income from a portfolio of industrial properties, and income from stakes in other companies. This includes a substantial chunk of Washington H. Soul Pattinson & Co Ltd (ASX: SOL), which is famous for increasing its dividend for almost 20 years straight.
Using these different earnings bases, Brickworks is able to pay a consistently growing dividend. Today, this dividend will net you a 2.95% yield (4.2% grossed-up), which I'm confident will continue to grow well into the future.
Stockland Corporation Ltd (ASX: SGP)
Stockland is a REIT (real estate investment trust) that has a vast portfolio of income-producing properties that it uses to pay its dividend distributions. These include everything from shopping centres and business parks to retirement villages and logistical warehouses.
Although property in Australia is arguably expensive these days, SGP shares are still offering a 5.76% dividend yield on current prices (although with no franking credits attached). It's a stock that I think has a well-deserved place in a diverse dividend income portfolio.
Foolish takeaway
Despite the volatility of the share market, I think these 3 ASX dividend stocks offer much better returns through passive income than a term deposit today, especially if you take a long-term view of things. Stockland has recently gone ex-dividend, so it might be a particularly good time to pick up SGP shares on the cheap.
