On Tuesday the Reserve Bank of Australia will meet to discuss the cash rate. Once again, the market is expecting the central bank to hold firm with rates at the record low of 0.1%.
While this may be disappointing for anyone trying to earn a passive income from savings accounts or term deposits, all is not lost.
The two ASX dividend shares listed below are both rated as buys and tipped to provide generous yields. Here’s what you need to know:
Aurizon Holdings Ltd (ASX: AZJ)
Analysts at Macquarie believe that this rail freight operator’s shares are in the buy zone for income investors. The broker currently has an outperform rating and $4.32 price target on its shares. This compares to the latest Aurizon share price of $3.81.
Macquarie notes that Aurizon is aiming to reduce its exposure to thermal coal over the next decade, which it sees as a good move for ESG reasons. In addition to this, the broker believes the company has almost $1 billion of balance sheet capacity to drive its growth through acquisitions. It suspects that grain companies with port and logistics assets would be a good fit.
In the meantime, the broker is forecasting partially franked dividends of 27.8 cents per share in FY 2021 and then 28.6 cents per share in FY 2022. This represents very attractive yields of 7.3% and 7.5%, respectively.
Westpac Banking Corp (ASX: WBC)
Citi is a fan of this banking giant, which remains its top pick in the sector. The broker currently has a buy rating and $29.50 price target on its shares. This compares to the latest Westpac share price of $25.53.
It likes the bank partly due to its attractive valuation and bold cost base targets. In respect to the latter, Westpac is aiming to reduce its cost base to $8 billion in the coming years. This will be a sizeable reduction from $12.7 billion currently.
Citi is forecasting fully franked dividends of $1.16 per share in FY 2021 and then $1.18 per share in FY 2022. This represents yields of 4.5% and 4.6%, respectively, over the next couple of years.