Luckily in this low interest rate environment, there are a good number of dividend shares on the ASX offering generous yields.
Two which I think are among the best options on the Australian share market right now are listed below. Here's why I would buy them:
BWP Trust (ASX: BWP)
The first ASX dividend share to consider buying is BWP Trust. It is the largest owner of Bunnings properties in the Australian market with a total of 68 warehouses leased to the home improvement giant. Given the quality of Bunnings and its positive long term outlook, I think it is a great tenant to have. Particularly during the pandemic when many retailers are struggling but Bunnings continues to thrive.
It was thanks to Bunnings' positive performance during the pandemic that BWP's property valuations actually rose this year. In its FY 2020 full year results the company revealed a 24.4% increase in profit to $210.6 million including gains on investment properties. In light of this and its strong collections, BWP was able to increase its distribution in FY 2020. Looking ahead, the company expects pay shareholders a distribution in the region of 18.29 cents per unit in FY 2021. Based on the current BWP share price, this works out to be an attractive 4.6% yield.
Rural Funds Group (ASX: RFF)
Another ASX dividend share I would buy is this agriculture-focused property group. Rural Funds is the owner of 61 properties across five agricultural sectors. These include almonds, cattle, cropping, vineyards, and macadamias properties. At the end of FY 2020, the company's weighted average lease expiry (WALE) stood at a lengthy 10.9 years. Positively, these leases have a high weighting to blue chip customers. Approximately 78% of its revenue comes from corporate or listed tenants such as wine giant Treasury Wine Estates Ltd (ASX: TWE).
As with BWP, Rural Funds has been able to continue its growth during the pandemic. It reported an 8% increase in property revenue to $72 million in FY 2020. Looking ahead, management reaffirmed its plan to grow its distribution by 4% in FY 2021 and intends to pay shareholders 11.28 cents per share. Based on the current Rural Funds share price, this works out to be a 5% yield.
