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 ASX dividend share for income investors to consider is Coles.
It is of course one of the “big two” supermarket operators in the ANZ market. It also has a number of complementary businesses such as flybuys and Liquorland.
Due to the strength of its businesses and their positive long term outlooks, Coles has been tipped as an ASX share to buy. Especially for income investors due to its attractive yield and favourable dividend policy.
Goldman Sachs is very positive on the company and is forecasting generous dividend payments in the coming years. Its analysts currently expect dividends per share of 62 cents in FY 2021 and 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. Goldman has a buy rating and $20.50 price target on its shares.
Transurban Group (ASX: TCL)
Another ASX dividend share to look at this toll road operator. Transurban is the owner of a collection of important roads in Australia and North America. These include CityLink in Melbourne and the Cross City Tunnel and Eastern Distributor in Sydney.
While lockdowns and travel disruption have led to a notable decline in traffic on its roads over the last 12 months, volumes are recovering and are expected to continue doing so as life returns to normal.
The good news for income investors is that this should mean that its distributions return to normal soon after as well. That’s certainly what Ord Minnett is expecting. It is positive on Transurban and currently has a buy rating and $16.00 price target on its shares.
Ord Minnett is forecasting dividends of 37 cents per share in FY 2021 and then 58 cents per share in FY 2022. Based on the latest Transurban share price of $14.00, this equates to yields of 2.6% and 4.1%, respectively, over the next two years.