Fortunately in this low interest rate environment, there are a lot of dividend shares for investors to choose from on the Australian share market.
Three which I think would be good long term options are listed below. Here's why I would buy them:
Commonwealth Bank of Australia (ASX: CBA)
The Commonwealth Bank share price has come under a lot of pressure this year due to concerns that it might experience a spike in bad debts from the pandemic. While this is a real possibility, based on how quickly Australia is reopening, I believe the provisions it has taken will be more than enough. In light of this, I am optimistic the worst is behind the bank and now could be a good time to invest. Especially given the generous dividend yield its shares offer. I estimate that it will pay a $3.70 per share dividend in FY 2021. This equates to a forward dividend yield of 6.3%.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
If you're not in need of income immediately, then it could be worth considering a patient investment in this airport operator's shares. Times are certainly hard for the airport operator, but it won't be long until a growing number of travellers are passing through its terminals again. According to a recent note out of Goldman Sachs, it expects Sydney Airport to start recovering from the pandemic in the coming months. It believes this will allow it to pay a 29 cents per share distribution in FY 2021 and then a 37 cents per share distribution in FY 2022. This represents yields of 4.9% and 6.25%, respectively.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
A final option for income investors to consider buying right now is the Vanguard Australian Shares High Yield ETF. I think this exchange traded fund is a quality option for income investors due to the diversity of its holdings. The fund provides investors with exposure to many of the highest yielding shares on the ASX through a single investment. This includes the banks, telcos, and mining giants. At present I estimate that its units offer a forward dividend yield of at least 5%.
