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Why I would buy CBA and these ASX dividend shares

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Are you looking for better interest rates than those on offer with savings accounts or term deposits? Good news! Despite the pandemic, the Australian share market is still home to a good number of shares offering generous dividends.

Three ASX dividend shares which I think are top options right now are listed below:

BWP Trust (ASX: BWP)

The first dividend share to consider buying is this real estate investment trust. It leases the majority of its portfolio to hardware giant Bunnings, which I feel is a fantastic tenant to have. The benefits of this were demonstrated yesterday when BWP revealed its estimated final distribution for FY 2020. The company intends to declare a 9.27 cents per unit distribution, which will bring its full year distribution to a total of 18.29 cents per unit. Based on its last close price, this equates to a 4.65% distribution yield.

Commonwealth Bank of Australia (ASX: CBA)

I think the pullback in the Commonwealth Bank share price this year has brought it down to an attractive level for a patient investment. Especially as I’m optimistic that the worst is now behind the banks after the Royal Commission, bushfires, and pandemic. This could even mean that a return to growth isn’t too far away for the bank. For now, though, I expect Commonwealth Bank to cut its dividend down to approximately $3.70 per share in FY 2021. This equates to a fully franked forward 5.3% dividend yield.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Investors that are not in immediate need for dividends might want to consider Sydney Airport. I’m not overly convinced the airport operator will pay a final dividend this year, or if it does it will be significantly reduced. However, as long as Australia avoids a second wave of coronavirus, I believe the domestic tourism market will have recovered enough for Sydney Airport to pay a decent 29 cents per share dividend in FY 2021. If this proves accurate, it will mean a 5% dividend yield next year.

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Returns As of 6th October 2020

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.

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