The market remains split on the prospects of a rate cut at the next Reserve Bank meeting in February. Current cash rate futures are pointing to a 47% probability of a rate cut next month.
However, looking further afield, the market appears convinced that there will be at least one cut this year. Futures contracts have priced in a 100% probability of the cash rate being cut to 0.5% by August.
This is great news for borrowers but not for savers. In light of this, I continue to believe income investors would be better looking to the share market for a source of income.
Here are three ASX dividend shares that I would buy:
National Storage REIT (ASX: NSR)
National Storage is one of the largest self-storage providers in ANZ market. It currently owns 168 centres from which it provides tailored storage solutions to over 60,000 residential and commercial customers. It has been growing at a solid rate in recent years thanks to increasing demand and via acquisitions and developments. The good news is that I believe this can continue for the foreseeable future, especially now the housing market is improving. Its units currently offer a generous distribution yield of 4.9%.
Scentre Group (ASX: SCG)
Scentre Group is the property company behind the Westfield shopping centres in the ANZ market. These are some of the highest quality and most frequently visited retail assets in the region. Unsurprisingly this means they are extremely popular with retailers, which has led to 99.3% of its portfolio being leased. I'm confident this trend will continue for the foreseeable future and put Scentre in a good position to grow its distribution in the coming years. At present its units offer a trailing 5.6% distribution yield.
Transurban Group (ASX: TCL)
Transurban is one of the world's leading toll road operators. It continues to benefit from the increasing number of vehicles escaping congestion by using its roads. Combined with periodic toll increases and developments and acquisitions, this has supported solid distribution growth over the last decade. Pleasingly, I expect more of the same over the next decade, potentially making it a great option for income investors. I estimate that Transurban's shares currently offer a forward 4% distribution yield.
