While I think that Commonwealth Bank of Australia (ASX: CBA) would be a good option for income investors, not everyone is keen on the banks right now.
For those investors, I have picked out three non-bank dividend shares which I think would be good alternatives.
Here's why I like them:
BWP Trust (ASX: BWP)
The first dividend share to consider buying is BWP. It is a real estate investment trust with a focus on warehouses. Most of its warehouses are leased to hardware giant Bunnings, which is owned by Wesfarmers Ltd (ASX: WES). I think Bunnings is arguably the highest quality retailer in the country and likely to stay in its warehouses for the long term. As a result, I believe BWP's earnings are very defensive and it is well-placed to grow its distribution in the future. At present I estimate that it offers investors a 5.2% yield.
Coles Group Ltd (ASX: COL)
This supermarket giant could be a great alternative to the banks. Unlike the banks, it appears well-placed to continue its sales growth whatever economic conditions it is facing. In addition to this, with the company aiming to strip out costs materially and embrace new technologies, I expect its margins to improve over the next decade and support solid earnings and dividends growth. In FY 2021 I estimate that its shares will provide investors with a fully franked dividend yield of 4.2%.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
A final option for income investors to consider is Sydney Airport. Although I suspect its dividends may be limited in 2020 due to the material decline in passenger numbers, I believe they will both bounce back in 2021 and 2022. This could make it worth being patient and buying shares with a long term view. 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 represents a 4.9% and 6.7% yield, respectively.
