The Motley Fool

Forget term deposits and buy these top ASX dividend shares

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%.

And don't miss this ASX dividend share which analysts are raving about right now...

NEW: Expert names top dividend stock for 2020 (free report)

When our resident dividend expert Edward Vesely has a stock tip, it can pay to listen. After all, he’s the investing genius that runs Motley Fool Dividend Investor, the newsletter service that has picked huge winners like Dicker Data (+92%), SDI Limited (+53%) and National Storage (+35%).*

Edward has just named what he believes is the number one ASX dividend stock to buy for 2020.

This fully franked “under the radar” company is currently trading more than 24% below its all-time high and paying a 6.7% grossed-up dividend.

The name of this dividend dynamo and the full investment case is revealed in this brand new free report.

But you will have to hurry -- history has shown it can pay dividends to get in early to some of Edward’s stock picks, and this dividend stock is already on the move.

See the top dividend stock for 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers 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.