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Why you should buy ANZ and these ASX dividend shares for income

Fortunately for income investors in this low interest rate environment, there are a good number of shares on the ASX paying shareholders generous dividends.

Three which I think are quality options right now are listed below. Here’s why I would buy them:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

I think ANZ could be a good option for income investors. I believe the selloff of its shares has been overdone and has left them trading at an attractive price of just 13x estimated FY 2021 earnings and 0.9x FY 2021 book value. And while dividend cuts are inevitable, I’m expecting the banking giant to still pay one which provides a very generous yield next year. I’m forecasting a partially franked dividend of $1.05 per share in FY 2021. Based on the current ANZ share price, this will provide investors with a very generous forward 5.7% yield.

BHP Group Ltd (ASX: BHP)

Another dividend share to consider buying is BHP. I believe the Big Australian is well-positioned to generate strong free cash flows in FY 2020 and FY 2021 thanks to its low cost operations and favourable commodity prices. This is particularly the case for its iron ore operations, which are benefiting from spot prices of ~US$110 a tonne. This compares to its full year cost guidance of just US$13-14 per tonne for the Western Australia Iron Ore operation. Based on the latest BHP share price, I estimate that its shares offer investors a forward fully franked ~4.9% dividend yield.

Woolworths Limited (ASX: WOW)

A final ASX dividend share to consider buying is Woolworths. I think the conglomerate would be a good option for income investors due to its quality brands, their defensive qualities, and their positive long term outlooks. Combined with its supply chain improvement plans, I believe the company is well-positioned to continue growing its earnings and dividend at a solid rate over the next decade. Based on the current Woolworths share price, I estimate that its shares provide investors with a fully franked 3% 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 owns shares of 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.

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