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3 ASX dividend shares to help you beat the rate cuts

Cut interest rates

Last week the Reserve Bank cut the cash rate down to a record low of 0.5%.

Unfortunately for savers and income investors, this doesn’t look likely to be the record low for very long.

According to the latest cash rate futures, the market is pricing in a 100% probability of a rate cut to 0.25% at the central bank’s next meeting in April.

But don’t worry, because the three dividend shares below offer generous yields in this low interest rate environment. Here’s why I think they are worth considering when the market settles:

BWP Trust (ASX: BWP)

I think BWP would be a good option for income investors right now. It is a real estate investment trust which generates the vast majority of its income from being the landlord of hardware giant Bunnings. As Bunnings is one of the highest quality retail businesses in the country, I believe the probability of store closures and rental defaults is very low. In light of this and combined with periodic rental increases, BWP looks well-positioned to continue growing its income and distribution at a decent rate over the next decade. At present its shares offer an estimated forward 4.9% distribution yield.

Coles Group Ltd (ASX: COL)

It is becoming increasingly difficult to find companies that have not been negatively impacted by the coronavirus in some way. But one of those companies is this supermarket giant. It has experienced a surge in demand for many items over the last couple of weeks which I expect to give its like for like sales a boost in the second half. Combined with its cost cutting and strong first half performance, I believe Coles is well-placed for solid earnings and dividend growth in FY 2020. I estimate that Coles will pay a 57.7 cents per share dividend this year, which equates to a fully franked forward 3.7% dividend.

Stockland Corporation Ltd (ASX: SGP)

A final option to consider buying is this diversified property company. Stockland is a developer and manager of properties including retirement villages, housing estates, and shopping centres. Whilst it wasn’t the strongest performer during the first half, management appears confident its earnings will be skewed to the second half. In light of this, it reaffirmed its plan to pay a 27.6 cents per share full year distribution. This equates to a very generous 5.8% distribution yield.

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Returns As of 6th October 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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