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3 ASX dividend shares to buy if the cash rate goes to zero

On Monday the U.S. Federal Reserve surprised global markets by cutting interest rates to zero. I don’t think it will be long until the Reserve Bank of Australia follows suit and cuts the cash rate again.

This is likely to mean that the interest rates on offer with term deposits and savings accounts drop to even lower levels. But don’t worry, because there are a large number of dividend shares offering investors very generous yields.

Here’s why I think they could be great options for income investors when the market volatility eases:

Accent Group Ltd (ASX: AX1)

I think Accent Group could be a good option for income investors after a material pullback in its share price. It was a strong performer in the first half of FY 2020 and delivered solid profit and dividend growth. Whilst the coronavirus outbreak could make it difficult to replicate this success in the second half, I’m confident that it will bounce back strongly in FY 2021. Especially given the growing popularity of its Athlete’s Foot, HYPE DC, and Platypus stores with consumers. At present its shares offer a trailing fully franked 8.7% dividend yield.

BWP Trust (ASX: BWP)

BWP is a real estate investment trust and the landlord of hardware giant Bunnings. I think Bunnings is one of the highest quality retailers in the country and a great tenant to have. This is because the probability of store closures and rental defaults is very low and periodic rental increases should be easily absorbed. Overall, I believe this puts BWP in a solid position to continue growing its income and distribution at a predictable rate over the next decade. At present its shares offer an estimated forward 5.7% distribution yield.

Transurban Group (ASX: TCL)

A final dividend share to consider buying is Transurban. I continue to believe this toll road operator is one of the best dividend shares on the market and believe it is well placed to continue delivering solid income and distribution growth over the next decade. This is due to the quality of its roads, their strong pricing power, and increasing traffic flows. They combined to help the company deliver an 8.6% increase in half year proportional toll revenue to $1,396 million in February. Management also reaffirmed its plan to increase its FY 2020 distribution to 62 cents per share, which equates to a yield of 5.7%. And while lockdowns in Europe could be a sign of things to come here and in the United States, I expect any impact to traffic flows to only be temporary.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Transurban Group. The Motley Fool Australia has recommended Accent Group. 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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