According to the latest weekly economic report by banking giant Westpac Banking Corp (ASX: WBC), its economics team continues to believe that the cash rate will remain on hold until at least the end of 2023.
It commented: "We do not expect the cash rate to be increased before end 2023 with our forecast for an unemployment rate still holding around 6% by that time."
In light of this, I continue to believe the Australian share market is the best place to go to earn a passive income.
Three dividend shares that I would buy are listed below. Here's why I like them:
Accent Group Ltd (ASX: AX1)
Accent Group is the footwear focused retail group behind store brands such as HYPE DC and Platypus. The company's FY 2020 result is likely to be impacted greatly from store closures and its final dividend may be cancelled in August. However, I've been impressed with its online sales growth during the pandemic, which just goes to show that demand is still there. As a result, I'm confident that its retail stores will bounce back strongly in FY 2021 when trading conditions return to normal. Based on this, I estimate that its shares offer a fully franked 5.5% FY 2021 dividend yield.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
I think the current crisis and the impact it has had on dividend payments by many companies shows that it pays to maintain a diverse portfolio. For this reason, I think the Vanguard Australian Shares High Yield ETF would be a good option for income investors. This is because it provides investors with exposure to many of the highest yielding blue chip shares on the ASX through a single investment. At present I estimate that its units offer a forward dividend yield of at least 5%.
Wesfarmers Ltd (ASX: WES)
A final dividend share I would buy is Wesfarmers. I like the conglomerate due to its high quality portfolio, solid growth potential, and sizeable cash balance. The latter is likely to be used by the Bunnings owner to bolster its portfolio in the coming years and drive further growth. For now, I estimate that Wesfarmers' shares will provide a dividend yield of approximately 4% in FY 2021.
