Insights

Buy these ASX dividend shares to smash low interest rates

Rural Funds Group (ASX:RFF) and this ASX dividend share could be great options for income investors right now. Here’s why…
The post Buy these ASX dividend shares to smash low interest rates appeared first on Motley Fool Australia. –

piles of coins increasing in height with miniature piggy banks on top

This afternoon the Reserve Bank elected to keep rates on hold at the record low of 0.25%.

However, it might be a little too soon for income investors to celebrate, because the central bank appears to have left the door open to a rate cut in November.

Governor Lowe commented: “The Board continues to consider how additional monetary easing could support jobs as the economy opens up further.”

In light of this, I think investors ought to consider buying the dividend shares listed below to combat low interest rates:

Rural Funds Group (ASX: RFF)

The first ASX dividend share to consider buying is this real estate investment trust. Rural Funds owns a portfolio of high quality agricultural assets across several different industries. This includes macadamia orchards, cattle assets, cotton assets, almond orchards, and vineyards. The latter are leased to wine giant Treasury Wine Estates Ltd (ASX: TWE). In addition, many of its other assets are leased to some of the most experienced agricultural operators in the country, which I feel is a testament to their quality.

The strength of its portfolio was on display for all to see in FY 2020 when Rural Funds delivered an 8% increase in property revenue to $72 million. This allowed the company’s board to increase its distribution by its target rate of 4% per annum. The good news is that more of the same is expected in FY 2021 thanks to its long term tenancy agreements and periodic rent increases. Management intends to increase its distribution by 4% again to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a 4.9% yield.

VanEck Vectors Australian Banks ETF (ASX: MVB)

Another option for income investors to consider buying is the VanEck Vectors Australian Banks ETF. As you might have guessed from its name, this exchange traded fund gives investors exposure to the banking sector. And rather than having to choose just a single bank to invest in, this fund gives investors a piece of each of them. The VanEck Vectors Australian Banks ETF is invested in the big four banks, the regionals, and also investment bank Macquarie Group Ltd (ASX: MQG).

While predicting what dividends the banks will collectively pay in FY 2021 is difficult because of the pandemic, I would expect a yield in the region of 4%. This could then rise towards 6% in the following couple of years as trading conditions return to normal. Another bonus is that I think the banks are trading at attractive levels at the moment after sizeable declines this year. So, as well as benefiting from dividends, investors could experience solid share price gains over the next couple of years as bank shares potentially rerate to higher multiples.

These stocks could rocket in a Post-COVID world (FREE STOCK REPORT)

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and RURALFUNDS STAPLED. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Buy these ASX dividend shares to smash low interest rates appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!