On Tuesday the Reserve Bank of Australia opted to keep the cash rate on hold at 0.25%.
I suspect that this will be a familiar sight for Australian investors over the next year or two.
In light of this, I continue to believe that dividend shares are the best ways for investors to generate an income right now.
But which dividend shares should you buy? Three I would buy are listed below:
Coles Group Ltd (ASX: COL)
Although it doesn't offer the largest yield on the Australian share market, it is arguably one of the most secure. This is because, as we have seen in recent months, we still need food and toilet roll even in a crisis. In addition to this, thanks to its positive growth outlook, I believe Coles is well-positioned to increase its dividend consistently over the coming years regardless of economic conditions. In FY 2021 I estimate that its shares will provide investors with a fully franked dividend yield of 4.2%.
Dicker Data Ltd (ASX: DDR)
Another dividend share to consider buying is Dicker Data. Like Coles, it has been performing strongly during the crisis. Last month it revealed that its first quarter profits grew 36.3% on the prior corresponding period to $18.4 million. In light of this, it advised that it intends to increase its fully franked dividend by 31% to 35.5 cents per share in FY 2020. This represents a 5.1% fully franked dividend yield. I expect further growth in the coming years thanks to the increasing demand for its offering.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
A final option for long-term focused income investors is Sydney Airport. Its dividends in 2020 will inevitably be negatively impacted by the material decline in passenger numbers passing through its airport. However, the tourism market will bounce back in time. A recent note out of Goldman Sachs reveals that it expects Sydney Airport to pay a 27 cents per share distribution in FY 2021 and then a more normal 37 cents per share distribution in FY 2022. This equates to yields of 4.75% and 6.5%, respectively, which demonstrates why it could be worth being patient.
