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Why I would buy CBA and this high yield ASX dividend share

If you’re not happy with the interest rates on offer with savings accounts and term deposits, then you might want to consider buying one of the dividend shares listed below.

I estimate that these dividend shares offer FY 2021 yields that are among the most generous on the market. Here’s why I like them:

Commonwealth Bank of Australia (ASX: CBA)

If you don’t have meaningful exposure to the banking sector, then I think it would be well worth considering an investment in Commonwealth Bank. Especially given how the banking giant’s shares are trading 22% lower than their 52-week high. While a decline in the CBA share price is certainly not unwarranted, I believe the extent of its decline has been overdone and feel confident that the coronavirus provisions it has made are more than sufficient.

In light of this, while I expect a dividend cut in FY 2021, I don’t believe the cut will be as severe as some expect. I forecast a fully franked dividend in the region of $3.70 per share next year. This would be a generous 5.2% dividend yield based on the current Commonwealth Bank share price.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Another high yield ASX dividend share to consider buying is Sydney Airport. While I wouldn’t necessarily expect a final dividend from the airport operator in the second half of FY 2020, I’m optimistic that the domestic travel market will have recovered enough in 2021 to support a decent dividend payment. Just as long as the situation in Victoria doesn’t escalate and spread into other states.

At present, I estimate that Sydney Airport will pay a dividend in the region of 29 cents per unit next year. Which, based on the latest Sydney Airport share price, represents a 5.4% FY 2021 dividend yield.

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 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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