Why ASX dividend shares over property? I understand property has typically been Australians’ favourite way to invest. The great Australian dream is a quarter-acre block to call your own, after all.
But property prices are still relatively high, despite the coronavirus pandemic. And the future for the housing market is more uncertain than I’d like. So I think a better bet for cashflow is these 3 ASX dividend shares.
Woolworths Group Ltd (ASX: WOW)
Woolworths needs no introduction as Australia’s largest supermarket chain. The company also owns a network of pubs/hotels, the BWS and Dan Murphy’s liquor stores, as well as the Big W department store chain.
Woolworths’ dividend might not sound too enticing at its current trailing yield of 2.66%. But I think this is one of the safest dividends on the ASX due to the ‘consumer staples’ nature of the Woolworths business, and thus is worthy of inclusion in a dividend-focused portfolio. I’m also excited about the company’s plans to spin-off its liquor and hotel assets into a separate entity down the road.
BWP Trust (ASX: BWP)
BWP is a real estate investment trust (REIT), which means it primarily owns land and property assets. The benefits of owning a good-quality REIT like BWP compared to an investment property are numerous in my opinion. No stamp duty taxes and no ongoing maintenance hassles for shareholders are a good start.
BWP’s tenants aren’t likely to give you too much hassle either, considering the largest is Wesfarmers Ltd (ASX: WES)’s Bunnings Warehouse. And finally, I would consider any investment property that gives off a net 4% yield these days to be a top investment. Yet that’s what BWP’s trailing distribution yield is offering on current prices. As such, I think it is more than worthy as an alternative to an investment property.
Telstra Corporation Ltd (ASX: TLS)
Our last dividend pick is this telco giant. The Telstra share price is not as attractive today (at $3.48 at the time of writing) than a few weeks ago when it was asking around $3.10. But I still think Telstra is a solid pick for dividend income at these prices.
Telstra has paid out 16 cents per share in dividends over the past 12 months (including the 6 cents of special nbn dividends). That gives Telstra a trailing yield of 4.64%, which isn’t a bad offering, especially considering the payouts come with full franking.
I also think Telstra is a highly defensive company, considering the lengths it would take for most people to part with their phones or their internet connection. As such, I think it’s a robust holding to have in a dividend portfolio, and a great alternative to an investment property today.
I’ve got nothing against property and property investors. But it’s my opinion that a portfolio of strong ASX dividend shares can offer more certainty and net yield than many houses currently on the market, and the above 3 shares are a great place to start!
Where to invest $1,000 right now
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Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Wesfarmers Limited and Woolworths Limited. 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.