Westpac (ASX:WBC) tips RBA cash rate cut in November

Westpac Banking Corp (ASX:WBC) is tipping the Reserve Bank to make a cut to the cash rate in November…

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Interest rates

Although the Reserve Bank held firm with the cash rate at its October meeting, the economics team from Westpac Banking Corp (ASX: WBC) doesn’t expect that to be the case for long.

In its latest economics report, the bank’s Chief Economist, Bill Evans, reiterated his belief that a cut to 0.1% is coming.

He said: “We continue to expect the RBA will cut the cash rate; 3-year bond yield target; and TFF rate from 0.25% to 0.10% in November and will also announce additional government bond purchases for maturities between 5 and 10 years at that meeting.”

After which, the bank is predicting that the cash rate will stay on hold at this level until at least June 2022 when its forecast period ends.

In light of this, I think income investors ought to prepare for at least a few more tough years of low rates.

But don’t worry, because there are plenty of quality ASX dividend shares for investors to generate an income from.

One that I think would be great option for investors right now is named below. Here’s why I would buy it:

BWP Trust (ASX: BWP)

I think one of the best ASX dividend share to consider buying is BWP. It is a real estate investment trust (REIT) that invests in and manages commercial assets across Australia. The majority of its assets are leased to home improvement giant, Bunnings Warehouse.

While having such a reliance on a single tenant can often be a risk, I see it as a strength on this occasion. This is because Bunnings is arguably the highest quality retailer in the country, making the risk of rent defaults and stores closures very low. Furthermore, the owner of Bunnings,  Wesfarmers Ltd (ASX: WES), is also a major BWP shareholder. I believe this means Wesfarmers would be unlikely to do anything that would have a negative impact on its investment.

Overall, I believe this puts the company in a strong position to grow its income and distribution at a consistent rate over the next decade. Based on the current BWP share price, I estimate that it offers investors a forward 4.4% yield.

Wondering where you should invest $1,000 right now?

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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