Fortunately, in this low interest rate environment, there are a good number of dividend shares offering investors generous yields.
Two dividend shares that I would buy right now instead of a term deposit are listed below. Here's why I think they are great income options:
BWP Trust (ASX: BWP)
As the largest owner of Bunnings Warehouse sites in Australia with 68 leases, I believe BWP could be a property trust to buy. This is because I believe that Bunnings is one of the highest quality businesses in the country and well-positioned to continue its growth through the pandemic and over the coming years. Especially given how the government is supporting the construction industry with renovation grants.
I believe this should make it easier for BWP to collect rent as normal at a time when other retail property companies are struggling to do so. Based on the current BWP share price, I estimate that the company's shares offer investors a 4.8% FY 2021 dividend yield.
Rural Funds Group (ASX: RFF)
Another property company which I think would be a great option for income investors is Rural Funds. It has a focus on agricultural properties and owns a diverse range of assets across several different industries. These include cattle, vineyards, and orchards. Due to the nature of these industries, its tenants generally sign long term leases. And as these leases tend to contain fixed rental increases, the company has great visibility with its future earnings and distributions.
As a result, it has already provided its guidance for FY 2021. Next year Rural Funds intends to increase its distribution to 11.28 cents per share. This works out to be a forward 5.6% distribution yield based on the current Rural Funds share price. Overall, I think this makes Rural Funds a great dividend share to own in the current environment.
