The S&P/ASX 200 Index (ASX: XJO) has fallen sharply in recent weeks as many businesses and families are being impacted by the continuing coronavirus crisis. As a result, some ASX investors have been left disillusioned.
However, it’s always good to be reminded about the fundamentals of share investing, and that stock market crashes like the one we’re now experiencing can actually present investors with good buying opportunities.
With share prices down very significantly on what they were a few weeks ago, dividend yields are now generally much higher. Although trailing dividend yields are based on prior earnings and should be used with caution, I believe they are still a reasonable indicator of future returns.
With that in mind, here are 2 of my top ASX dividend share picks right now for investors with a long-term investment horizon. Both companies have strong balance sheets and offer good dividend yields.
Wesfarmers Ltd (ASX: WES)
Wesfarmers’ Officeworks, Bunnings and Kmart stores have all seen a spike in sales for a range of items over the past few weeks as consumers and businesses stock up on essential items such as office supplies and computer equipment so that they can work from home.
Also, there are many essential products and services provided by Wesfarmers that are critical for government, small businesses and emergency services and utilities.
For example, as reported on ABC’s The Business, one of Wesfarmers’ businesses, Coregas, is working closely with the hospital system in NSW to supply them with specialty gas and oxygen due to the medical challenges facing hospitals treating coronavirus patients.
Wesfarmers is a highly diversified company with operations in general retail segments including general merchandise and office supplies, as well as industrial segments such as chemicals, energy, fertilisers, and safety products. As a result, I believe that Wesfarmers is positioned to weather the difficult months ahead better than most. Wesfarmers shares also currently offer a trailing dividend of 4.4%, which grosses up to 6.28% with full franking.
Telstra Corporation Ltd (ASX: TLS)
As Australia’s leading telecommunications provider, I believe that Telstra is also well-positioned during this coronavirus crisis.
Not only does Telstra have very deep pockets and a strong balance sheet, but its broadband and mobile services will also be essential to both businesses and consumers throughout the crisis.
Already there has been a sharp increase in fixed broadband bandwidth usage as more children stay home from school and more Aussies work from home. This is only likely to increase in the coming months.
Additionally, there will be more demand for telecommunication services as people keep in touch with family and friends and are entertained through streaming media services such as Netflix.
Telstra shares currently offer a trailing dividend yield of 5.06% (inclusive of nbn special dividends), which grosses up to 7.23% with full franking.
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Motley Fool contributor Phil Harpur owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. 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.