It is looking as though 2020 will be a difficult year for income investors.
While this is understandably very disappointing, I’m confident that 2021 will be very different.
This could make it worth looking beyond this year and buying the dividend shares that could provide generous yields in 2021.
Two to consider are listed below:
Commonwealth Bank of Australia (ASX: CBA)
Commonwealth Bank looks to be the best placed bank to pay another dividend in FY 2020. However, given the current trading conditions, it wouldn’t be overly surprising if the bank chose not to pay one. But I wouldn’t let that put you off investing. I expect trading conditions to start to improve once the crisis passes. And although it may be a couple of years until the bank is back to its best, I believe it will still be able to pay shareholders attractive dividends before then. In FY 2021 I estimate that Commonwealth Bank will pay a dividend in the region of ~$3.70 per share. This represents a fully franked 6.25% dividend yield.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
With its passenger traffic currently down ~98% because of the pandemic, I think Sydney Airport shareholders will be lucky if they get any dividends this year. However, travel markets will rebound and traffic will start to flow through its airports again in the not so distant future. I believe this leaves the airport operator well-placed to pay a decent dividend in FY 2021. At present I estimate that it will pay ~27 cents per share to shareholders. This equates to a generous forward 4.8% yield. After which, in FY 2022 I expect a recovery in international tourism to allow Sydney Airport to lift its dividend to around ~37 cents per share. This will be a very attractive yield of 6.6% if it proves accurate.
If you're looking for more dividends, then I would also be buying the highly rated dividend share recommended below...
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.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.