Unfortunately for income investors, it looks likely to be some time until interest rates return to normal levels again.
In light of this, I continue to believe the share market is the best place to earn a passive income.
But which ASX dividend shares should you buy out of the hundreds on offer? Three that I would buy are listed below:
Coles Group Ltd (ASX: COL)
The first dividend share to look at buying right now is Coles. I think the supermarket giant is a top option due to my belief that it is well-placed to grow both its earnings and dividend at a solid rate during the 2020s. This is thanks to the positive industry outlook, its long track record of delivering same store sales growth, and its cost cutting and automation plans. At present I estimate that Coles’ shares offer investors a fully franked 3.7% FY 2021 dividend.
Rural Funds Group (ASX: RFF)
Another dividend share that I would be buying is Rural Funds. This property group owns a diversified portfolio of high quality Australian agricultural assets which include cattle properties, vineyards, and orchards. One of the main attractions to the company for me is its long tenancy agreements. With a weighted average lease expiry of over a decade and rental increases built into contracts, Rural Funds appears perfectly positioned to consistently increase its distribution on a yearly basis. This will be the case in FY 2021, with management intending to lift its distribution by 4% to 11.28 cents per share. This represents a 5.4% yield.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
A final dividend share for income investors to look at is the Vanguard Australian Shares High Yield ETF. I think this exchange traded fund is a great option because it gives investors exposure to a diverse group of high yielding ASX dividend shares through a single investment. This could make it ideal for investors that don’t have enough funds to maintain a truly diverse portfolio. At present I estimate that its units provide a forward dividend yield of at least 4.5%.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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.