One big positive in this low interest rate environment is that the share market is home to shares offering generous yields.
Two such shares are listed below. Here's why they could be dividend shares to buy:
National Australia Bank Ltd (ASX: NAB)
If you're looking for exposure to the banking sector, then you might want to look at NAB. While times have been hard for the big four banks in recent years, things are looking very different now.
Thanks to improving trading conditions, a booming housing market, and cost cutting, NAB's outlook is arguably the most positive it has been in a long time.
It is for this reason that analysts at Goldman Sachs currently have a conviction buy rating and $29.97 price target on the bank's shares. NAB remains the broker's preferred sector exposure due to its cost management initiatives, its position as the largest business bank, and its strong capital position.
Combined, the broker believes NAB is in a position to grow its dividend at a solid rate over the coming years. It is forecasting fully franked dividends per share of 124 cents in FY 2021, 133 cents in FY 2022, and $1.38 in FY 2023.
Based on the current NAB share price of $26.23, this will mean yields of 4.7%, 5.1%, and 5.3%, respectively.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
Goldman Sachs is also positive on Sydney Airport. Although the airport operator has been hit hard by the pandemic, the broker believes it is worth sticking with it.
The broker notes that the airport operator remains in an effective hibernation and expects it to be a major beneficiary of the Australian domestic inoculation strategy.
And while it isn't expecting much by way of dividends this year, Goldman believes this will change in the years to come. The broker is forecasting dividends per share of 9 cents in FY 2021, 27 cents in FY 2022, and then 31 cents in FY 2023.
Based on the current Sydney Airport share price of $5.81, this will mean yields of 1.5%, 4.6%, and 5.3%, respectively, over the coming years. Goldman Sachs has a buy rating and $6.73 price target on the company's shares.
