With the cash rate potentially going down to a record low of 0.5% next month, I think income investors ought to consider switching out of savings accounts and term deposits and into dividend shares.
After all, with an average dividend yield of 4%, the potential returns on offer are vastly superior to those of many other interest-bearing assets.
Three dividend shares that I would consider buying are listed below:
Lendlease Group (ASX: LLC)
Lendlease is an international property and infrastructure group which I think could be a good option for income investors. I believe Lendlease's outlook is greatly improved after a couple of disappointing years. Especially with its development pipeline now approaching $100 billion in project value and the company offloading its struggling Engineering business. I expect this to underpin solid earnings and dividend growth for many years to come. So whilst its shares only currently offer an estimated fully franked 3.6% forward dividend yield, this could grow strongly in the future.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
Another top dividend share to consider is Sydney Airport. I believe the airport operator is well-placed to benefit from increasing international tourism and improving trends in the domestic tourism market. Combined with other growing revenue streams, I think Sydney Airport is in a position to lift its dividend again in 2020 and for a number of years to come. At present Sydney Airport's shares offer an estimated forward 4.6% dividend yield.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
A final income option for investors to consider buying is the Vanguard Australian Shares High Yield ETF. This ETF provides investors with exposure to some of the highest paying dividend shares on the Australian share market. The diverse group includes the big four banks, mining giant BHP Group Ltd (ASX: BHP), and telco company Telstra Corporation Ltd (ASX: TLS). Its units currently provide investors with a dividend yield of 5.3%.
