With interest rates on term deposits likely to remain at low levels for many years to come, dividend shares remain a great way to earn a passive income.
But which dividend shares should you buy? Two quality options are listed below:
Australia and New Zealand Banking GrpLtd (ASX: ANZ)
With the banking sector over the worst of its issues, now could be a good time to invest if you don’t already have exposure to it. Especially given the booming housing market and the relaxing of responsible lending rules. This should be supportive of mortgage loan growth in the near term.
Another positive is that APRA has removed all dividend payment restrictions. This is likely to lead to some generous dividend payments over the coming years, particularly given ANZ’s strong capital position.
Morgans is positive on the company. It recently put an add rating on its shares and lifted the price target on them to $31.00.
The broker is forecasting a $1.45 per share dividend in FY 2021 and a $1.61 per share dividend in FY 2022. Based on the current ANZ share price, this represents fully franked yields of 5% and 5.5%, respectively.
Sonic Healthcare Limited (ASX: SHL)
Sonic Healthcare is a global healthcare provider with specialist operations in laboratory medicine, pathology, diagnostic imaging, radiology, general practice medicine, and corporate medical services.
Since listing on the ASX in 1987 as a single laboratory, Sonic has grown to become one of the world’s leading healthcare providers with operations in Australasia, Europe and North America. It now employs more than 1,500 pathologists and radiologists, and more than 10,000 medical scientists, radiographers, sonographers, technicians and nurses.
Thanks largely to COVID-19 testing, demand for its services has been strong in FY 2021. This has underpinned very strong sales and earnings growth. And with COVID-19 not going away despite the rollout of vaccines, Sonic looks well-placed to continue its strong growth into FY 2022.
Credit Suisse is a fan of the company and has an outperform rating and $40.00 price target on its shares.
The broker is forecasting a 93 cents per share partially franked dividend in FY 2021 and a 97 cents per share dividend in FY 2022. Based on the current Sonic Healthcare share price, this will mean yields of 2.6% and 2.7%, respectively.
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Returns As of 15th February 2021
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.