It certainly is a tough time for income investors.
Many popular dividend-paying companies have been deferring or cancelling their dividends to conserve cash during the coronavirus pandemic.
And if that wasn’t bad enough, APRA has just requested banks and insurance companies limit discretionary capital distributions in the months ahead.
This is making it harder and harder to predict which shares will continue to pay dividends in the coming months.
However, three shares which I believe are well-placed to continue paying dividends are listed below. This could make them good options for income investors right now:
BHP Group Ltd (ASX: BHP)
The first dividend share to consider buying is BHP. Thanks to its low cost operations and sky high iron ore prices, BHP appears well-placed to generate high levels of free cash flow again in FY 2020. And given the strength of its balance sheet, I suspect the majority of this cash flow will be returned to shareholders. In addition to this, there’s the potential for special dividends over the next 12 months from divestments. Excluding the latter, I estimate that its shares offer a forward fully franked ~6% yield.
Coles Group Ltd (ASX: COL)
Another dividend share to consider buying right now is Coles. There are not many companies benefiting from the coronavirus pandemic, but Coles is one of them. It has been experiencing very strong demand from consumers due to panic buying and more eating at home. Another positive is that this increasing demand has gifted the supermarkets strong pricing power and allows them to limit their discounting. Overall, I believe the supermarket operator is well-placed to deliver solid earnings and dividend growth in FY 2020 and FY 2021. Based on its last close price, I estimate that its shares offer a fully franked forward ~4% dividend yield.
Telstra Corporation Ltd (ASX: TLS)
A final option for income investors to consider right now is this telco giant. It has been largely unaffected by the coronavirus pandemic and was able to recently reaffirm its FY 2020 guidance. I believe this highlights its defensive qualities, which are extremely attractive in the current environment. And based on its guidance, I am optimistic that Telstra will be able to maintain its 16 cents per share dividend in FY 2020. This equates to a generous fully franked 5.15% dividend yield.
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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 Telstra 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.