On Tuesday the Reserve Bank met for the second time of the year to decide on the cash rate.
Although cash rate futures were hinting that there was a possibility of a cut to zero, the central bank held firm and kept rates on hold at 0.1%.
While this is a small win for income investors, it doesn’t do much for them in the grand scheme of things. Term deposits and savings accounts remain at ultra low levels and show little sign of lifting from here in the next couple of years.
In light of this, it looks set to remain difficult for investors to generate sufficient income from these assets for some time to come.
But never fear, the Australian share market is home to a number of dividend shares that offer yields that smash those on offer with term deposits.
Among those shares are the big four banks. Here’s why income investors might be better off with their shares rather than their term deposits or savings accounts.
Australia and New Zealand Banking GrpLtd (ASX: ANZ)
Analysts at Morgans expect ANZ to pay a dividend of $1.45 per share in FY 2021 and then $1.61 per share in FY 2022. Based on the current ANZ share price of $26.97, this represents yields of 5.4% and 6%.
Commonwealth Bank of Australia (ASX: CBA)
Ord Minnett is forecasting dividends of $3.20 per share and $3.60 per share over FY 2021 and FY 2022, respectively. Based on the latest CBA share price, this equates to fully franked yields of 3.8% and 4.25%.
National Australia Bank Ltd (ASX: NAB)
As for NAB, UBS is expecting dividends of $1.25 per share and $1.40 per share over the next two years. With the NAB share price currently fetching $25.24, this represents yields of 4.95% and 5.5%.
Westpac Banking Corp (ASX: WBC)
Finally, Morgans has also pencilled in dividends of $1.32 per share in FY 2021 and $1.43 per share in FY 2022 from Australia’s oldest bank. Based on the latest Westpac share price, this will mean yields of 5.45% and 5.9%.
These Dividend Stocks Could Be Your Next Cash Kings (FREE REPORT)
Motley Fool Australia's Dividend experts recently released a brand-new FREE report revealing 3 dividend stocks with JUICY franked dividends that could keep paying you meaty dividends for years to come.
Our team of investors think these 3 dividend stocks should be a 'must consider' for any savvy dividend investor. But more importantly, could potentially make Australian investors a heap of passive income.
Don't miss out! Simply click the link below to grab your free copy and discover these 3 high conviction stocks now.
Returns As of 15th February 2021
Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
- Credit Clear (ASX:CCR) share price jumps 10% on Q3 update and Suncorp contract win – April 12, 2021 11:10am
- Why the Xero (ASX:XRO) share price can go even higher from here – April 12, 2021 11:00am
- Fatfish (ASX:FFG) share price jumps 12% on BNPL acquisition update – April 12, 2021 10:27am