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Forget term deposits and buy these ASX dividend shares

If you’re looking for better interest rates than those on offer with savings accounts or term deposits, then I have good news for you! Despite the pandemic, the Australian share market is still home to a good number of shares offering decent dividends.

Two ASX dividend options that I think are top picks for income investors right now are listed below. Here’s why I like them:

Commonwealth Bank of Australia (ASX: CBA)

The first ASX dividend share to consider buying is Commonwealth Bank. I think the banking giant’s shares are trading at a very attractive level following a sharp pullback this year. And although this pullback isn’t completely unjustified, I believe the extent of its decline has been overdone.

While guessing what dividend the bank will pay next year is difficult given the increased uncertainty caused by the coronavirus second wave, I would expect something in the region of $3.00 per share in FY 2021. After which, I expect a rebound to a more normal level in FY 2022. The former still equates to a generous fully franked 4% yield.

SPDR S&P/ASX 200 Fund (ASX: STW)

I think the SPDR S&P/ASX 200 Fund ETF could be another good option for income investors right now. As its name implies, this fund gives investors exposure to all of the 200 companies listed on the S&P/ASX 200 Index (ASX: XJO) through just a single investment. This means you’ll be investing in a diverse group of shares including Commonwealth Bank and the rest of the big four banks, mining giants, and countless REITs.

Although predicting what the yield will be in FY 2021 is tricky because of the pandemic, traditionally it is around 4% to 4.5%. I think this makes it a good option for income investors that don’t have enough funds to maintain a truly diverse portfolio.

These stocks could rocket in a Post-COVID world (FREE STOCK REPORT)

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In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 6/8/2020

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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