While I think that Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four banks remain great options for income investors in this low interest rate environment, not everyone is a fan of them.
For those investors, I have picked out three ASX dividend shares which I think could be great alternatives to the big four banks. Here's why I like them:
BWP Trust (ASX: BWP)
BWP is a real estate investment trust with a focus on commercial properties throughout Australia. The vast majority of BWP's warehouses are leased to the Bunnings business, which is owned by Wesfarmers Ltd (ASX: WES). I believe Bunnings is the highest quality retailer in the country and well positioned for growth. In light of this, I feel it is a great tenant to have in these uncertain times.
In fact, its quality was on display for all to see during BWP's recent full year results. At a time when retail properties are being devalued, BWP's properties appreciated materially in value. Overall, I believe the company is well-placed to continue growing its distribution at a steady rate over the coming years. Based on the latest BWP share price, I estimate that it offers investors a forward 4.6% yield.
Coles Group Ltd (ASX: COL)
Another dividend share to consider buying is Coles. I'm a big fan of the supermarket giant due to its solid long term outlook and defensive qualities. The latter has been on show this year during the pandemic. Coles has been experiencing a surge in sales during the crisis and looks set to deliver a very strong profit result later this month.
I expect more of the same in FY 2021, especially given recent lockdowns. After which, I'm confident its growth will continue over the next decade and beyond, albeit at a more modest rate. Another positive is its favourable dividend policy which sees it pay out between 80% and 90% of its earnings to shareholders. Based on the current Coles share price, I estimate that this will mean a 3.1% fully franked dividend yield in FY 2021.
