There has been a bit of talk recently of negative interest rates in Australia because of the pandemic.
While I don't expect the Reserve Bank to go as far as this, it is of course a real possibility. But whatever happens, interest rates are likely to be at ultra low levels for a long time to come.
In light of this, I would suggest investors skip term deposits and savings accounts and look to the share market for income.
Three top dividend shares I would buy today are as follows:
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 BWP's warehouses are leased to hardware giant Bunnings, which is owned by Wesfarmers Ltd (ASX: WES). While relying heavily on a single customer can be risky, it is worth noting that Wesfarmers is also a major shareholder with a ~23.6% stake in BWP. As a result, it is unlikely it will do anything that would negatively impact BWP's performance and share price. At present I estimate that it offers investors a forward 5.2% yield.
Coles Group Ltd (ASX: COL)
Another dividend share to consider buying is this supermarket giant. I'm a big fan of Coles due to its ability to grow whatever economic conditions it is facing. This has been demonstrated during the pandemic. In addition to this, with Coles aiming to cut costs materially and leverage new technologies, I expect its margins to improve over the next decade and support solid earnings and dividend growth. In FY 2021 I estimate that its shares will provide investors with a fully franked dividend yield of 4.1%.
Commonwealth Bank of Australia (ASX: CBA)
A final dividend share to consider buying is Commonwealth Bank. Its shares have been hammered this year and are down significantly from their 52-week high. While a decline is not unwarranted due to the negative impact of the pandemic, I think the selling has been overdone. In light of this, I think now could be a good time to consider a patient investment in its shares. I expect Commonwealth Bank to cut its dividend down to ~$3.70 per share in FY 2021. Based on this, its shares offer an estimated forward fully franked yield of 6.3%.
