According to the latest weekly economic report out of Westpac Banking Corp (ASX: WBC), its team continue to expect the cash rate to stay on hold at 0.25% until at least the end of 2021.
I suspect that this forecast will prove accurate, which could be bad news for income investors who will have to contend with low interest rates for some time to come.
But don't worry, because the ASX dividend shares listed below could help you earn an income in this low interest rate environment. Here's why I like them:
Coles Group Ltd (ASX: COL)
The first dividend share to look at is Coles. I believe the supermarket giant is well-positioned to grow its earnings and dividend at a solid rate over the next decade. This is due to its defensive business, refreshed strategy, expansion opportunities, and its focus on automation. Together with its enviable track record of delivering consistent same store sales growth, I believe the outlook for Coles and its shareholders is very positive. At present I estimate that its shares offer a fully franked 3.8% FY 2021 dividend.
Commonwealth Bank of Australia (ASX: CBA)
Another dividend share I would consider buying is Commonwealth Bank. Although its shares have recovered strongly from their lows, I still believe they offer a lot of value for investors at this level. While a dividend cut in FY 2021 seems inevitable, I'm optimistic it won't be as brutal as some believe. I suspect a dividend of ~$3.70 per share is possible. If this proves accurate it will mean a forward fully franked yield of 5.5%. This is certainly a very generous yield in this low interest environment.
Rural Funds Group (ASX: RFF)
A third and final dividend share to consider buying is Rural Funds. It is a property company that owns a diversified portfolio of high quality Australian agricultural assets. These asset include cattle properties, vineyards, and orchards. Due to the nature of these industries, tenants will generally sign up for ultra long leases. This gives Rural Funds great visibility with its future earnings. Which means it has been able to provide guidance for not just this year, but also next year. It plans to pay distributions of 10.85 cents per share in FY 2020 and then 11.28 cents per share in FY 2021. This equates to yields of 5.45% and 5.7%, respectively.
