On Tuesday the Reserve Bank cut the cash rate down to the record low of 0.5%.
This was great news for borrowers, but certainly not for savers and income investors who will have to contend with even lower interest rates.
The good news for the latter group is that the Australian share market is home to a large number of dividend shares offering vastly superior yields.
Kogan.com Ltd (ASX: KGN)
Last month this ecommerce company posted a 16.4% increase in first half gross sales and a 20.8% lift in net profit after tax to $8.9 million. This allowed the Kogan board to declare a fully franked interim dividend of 7.5 cents per share, up 22.9% on FY 2019's interim dividend. If the company grows its final dividend at a similar rate, then it would lead to a full year dividend of approximately 17.5 cents per share. Based on this, Kogan's shares offer an estimated forward fully franked 4% dividend yield at present. I think this is attractive, especially given its very strong long-term growth potential.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
If you're not sure which dividend shares to buy or don't have enough funds to create a truly diverse portfolio, then you might want to consider the Vanguard Australian Shares High Yield ETF. This ETF gives investors exposure to many of the highest yielding shares on the Australian share market. This is a diverse group of companies ranging from mining shares, bank shares, retail shares, and telco giant Telstra Corporation Ltd (ASX: TLS). At present the ETF offers income investors a forecast forward 5.3% dividend yield.
Wesfarmers Ltd (ASX: WES)
Another option for income investors to consider is Wesfarmers. I'm a big fan of the conglomerate due to the diversity of its operations and its collection of high quality businesses. These include Bunnings, Officeworks, Target, Kmart, its stake in Coles Group Ltd (ASX: COL), and Catch. In addition to this, the company has exposure to mining and the property sectors. At present its shares offer investors a trailing fully franked 3.8% dividend yield.
