According to the latest cash rate futures, the market is pricing in a 100% probability of a rate cut by the Reserve Bank later today.
This is likely to put pressure on the interest rates of term deposits and savings accounts offered by the big banks.
In light of this, I believe income investors ought to consider investing in some of the high quality dividend shares on the ASX in order to generate a sufficient income.
Three that I would buy are listed below:
Accent Group Ltd (ASX: AX1)
The first dividend share to consider is Accent. It is a footwear focused retail company which has continued to deliver solid growth despite the tough trading conditions in the retail sector. In the first half of FY 2020, Accent recorded total sales of $507.9 million and a net profit after tax of $35.3 million. This was an increase of 10.9% and 9.7%, respectively, on the prior corresponding period. I expect more of the same in the second half, which should put it in a good position to grow its dividend further. At present its shares offer a trailing fully franked 5.7% dividend yield.
Telstra Corporation Ltd (ASX: TLS)
Another option for income investors to consider buying to beat the rate cuts is this telco giant. Thanks to the success of its T22 strategy, Telstra has been able to cut its costs materially over the last couple of years. And with more costs still to be stripped out, the NBN rollout nearing completion, and 5G internet now here, I believe the company's outlook is the best it has been in many years. Overall, I don't believe it will be too long until Telstra returns to growth again. Until then, I'm optimistic that its dividend is at a sustainable level of 16 cents per share. This equates to a fully franked 4.6% dividend yield.
Transurban Group (ASX: TCL)
A final option to consider today is Transurban. It is one of the world's leading toll road operators with a portfolio of key roads across Australia and the United States. I'm a big fan of the company due to the way it consistently delivers solid earnings and distribution growth thanks to the quality of its roads, their strong pricing power, and increasing traffic. They allowed Transurban to deliver an 8.6% increase in proportional toll revenue to $1,396 million and reaffirm its plan to increase its FY 2020 distribution to 62 cents per share. This equates to a yield of 4.15%.
