One of the consequences of the coronavirus-induced market crash is that asset valuations are now materially lower.
This is a big positive if you've got money to invest in the share market. As you're now able to invest in companies at a fraction of what people were willing to pay just six weeks ago.
Three dividend shares which I think are dirt cheap right now are listed below. Here's why I think income investors ought to consider picking up their shares:
Commonwealth Bank of Australia (ASX: CBA)
The shares of Australia's largest bank have fallen almost 34% from their 52-week high. Concerns over the impact of the coronavirus outbreak on the economy and cash rate cuts have weighed heavily on the banking giant's shares. Whilst these concerns are not unwarranted, I believe the extent of the decline has been severely overdone and leaves Commonwealth Bank's shares trading at a very attractive level. Furthermore, even after factoring in a sizeable dividend cut, I estimate that its shares still provide a fully franked ~6.3% dividend yield.
Jumbo Interactive Ltd (ASX: JIN)
This online lottery ticket seller's shares are down a whopping 69% from their 52-week high. As well as being caught up in the coronavirus crash, investors have been selling Jumbo's shares due to its declining earnings. However, it is worth noting that this is due to its decision to invest in growth opportunities. In light of this, I expect Jumbo to return to growth in FY 2021 and for its shares to re-rate higher. This could make it an opportune time to invest. Especially as its shares offer an estimated forward fully franked 4% dividend yield.
Transurban Group (ASX: TCL)
This toll road operator's shares are currently trading at $11.60, which is 30% lower than their 52-week high. Investors have been selling the company's shares due to a significant decline in traffic on its roads because of the coronavirus. This traffic decline led to the Transurban board withdrawing its distribution guidance for FY 2020 this week. Whilst this is disappointing, I'm confident that traffic volumes will rebound quickly once the crisis passes. In the meantime, I expect the company to pay a distribution of ~50 cents per unit in FY 2021. This equates to a 4.3% distribution yield.
