Next week the Reserve Bank of Australia will meet once again to discuss the cash rate.
According to the latest cash rate futures, at present the market is pricing in a 60% probability of a rate cut to zero.
While I'm not overly convinced there will be a cut to the cash rate on Tuesday, I am certain that rates will be staying at these low levels for a long time to come.
While this is good news for borrowers, it means savers and income investors will need to contend with low rates for a little while longer.
But don't worry if you're in the latter group, because the three ASX dividend shares listed below can help you generate an income in this low interest rate environment. Here's why I would buy them:
BWP Trust (ASX: BWP)
The first dividend share to buy is BWP Trust. It is a real estate investment trust and the landlord to 68 Bunnings Warehouse stores. I believe this is a great tenant to have and expect Bunnings to continue its strong performance in the coming years. Especially given how the government is supporting the renovation market with additional stimulus. I believe this puts BWP in a great position to increase its rental income and distribution at a modest rate for the foreseeable future. Based on the latest BWP share price, I estimate that it provides a 4.7% FY 2021 distribution yield.
Commonwealth Bank of Australia (ASX: CBA)
I think Commonwealth Bank could be a dividend share to buy. Although it isn't the cheapest bank share, I believe it deserves to trade at a premium to the rest of the big four. This is due to the quality of its operations and strong market position. And while this is unlikely to prevent a dividend cut in FY 2021, I don't believe the cut will be as severe as many expect. I continue to forecast a fully franked dividend in the region of $3.70 per share. This would be a generous 5.15% dividend yield based on the current Commonwealth Bank share price.
Telstra Corporation Ltd (ASX: TLS)
A final dividend share to consider buying is Telstra. I think the telco giant is a quality option for income investors thanks to its improving outlook and generous yield. In respect to its improving outlook, I'm confident that Telstra is on a pathway to a return to growth thanks to its T22 strategy. But until that comes, I believe its free cash flows will be sufficient to maintain its 16 cents per share dividend. Based on the latest Telstra share price, this equates to a fully franked 4.75% dividend yield.
