With interest rates likely to remain low for some time to come, the dividend shares listed below could be top options for anyone seeking a passive income stream.
Here’s why these dividend shares are rated as buys:
Coles Group Ltd (ASX: COL)
The first option for income investors to consider is Coles. This supermarket operator could be a good option due to its solid business model and very positive long term growth outlook.
And while its growth may be limited in the immediate term due to elevated sales in the prior corresponding period, this short term headwind will soon ease and then Coles has been tipped to resume its growth. This should lead to growing dividends over the coming years.
Goldman Sachs expects this to be the case and is forecasting dividends per share of 62 cents in FY 2021 and then 66 cents in FY 2022. Based on the current Coles share price of $16.60, this will mean fully franked yields of 3.7% and 4%, respectively, over the next two years.
The broker has a buy rating and $20.50 price target on the company’s shares.
Westpac Banking Corp (ASX: WBC)
Another option for income investors to look at is Westpac. This banking giant has returned to form quickly from the pandemic.
For example, for the six months ended 31 March, Westpac reported cash earnings of $3,537 million. This was a 256% increase over the prior corresponding period and a 119% lift over the second half of FY 2020.
This strong form meant the Westpac board was able to declare a fully franked interim dividend of 58 cents per share.
One broker that has been pleased with its recovery and is expecting more of the same in the near term is Morgan Stanley. It recently put an overweight rating and $29.20 price target on the bank’s shares.
Morgan Stanley is expecting Westpac to pay fully franked dividends per share of $1.18 and $1.25 over the next two years. Based on the latest Westpac share price of $25.65, this will mean yields of 4.6% and 4.9%.