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Forget term deposits and buy Coles and this ASX dividend share

Coles Group Ltd (ASX:COL) and this ASX dividend share could help you beat the low interest rates on offer with term deposits…
The post Forget term deposits and buy Coles and this ASX dividend share appeared first on Motley Fool Australia. –

Interest rates

If you’re finding it impossible to generate a sufficient income by using term deposits, I would suggest you consider focusing on ASX dividend shares.

This is because there are a good number of shares on the Australian share market which offer vastly superior yields.

But which ones should you buy? Here are two ASX dividend shares I would buy:

BWP Trust (ASX: BWP)

Income investors might want to consider BWP Trust for their portfolio. It is the largest owner of Bunnings properties in the Australian market with 68 warehouses leased to the home improvement giant. This has proven to be a great tenant for BWP to have during the pandemic. While many retail property companies are struggling to collect rent and posting sizeable declines in profits and property valuations, it’s a completely different situation for BWP. 

In its FY 2020 full year results the company reported a 1% increase in profit before gains on investment properties to $117.1 million. Including property gains, BWP’s profit was up 24.4% to $210.6 million. This put the company in a position to be able to increase its distribution in FY 2020. Looking ahead, in FY 2021 the company expects to pay shareholders a distribution in the region of 18.29 cents per unit. Based on the current BWP share price, this works out to be an attractive 4.5% yield.

Coles Group Ltd (ASX: COL)

Another ASX dividend share to consider buying is this supermarket giant. I think it is a great share to own right now due to its defensive qualities and strong market position. As with BWP, Coles was a positive performer in FY 2020 despite the pandemic. It delivered an impressive full year result in August, with sales growing 6.9% to $37.4 billion and net profit after tax increasing 7.1% to $951 million.

The good news is that Coles has started FY 2021 in a positive fashion and appears to be in a position to deliver another solid result this year. I expect this to allow the company to reward its shareholders with another generous dividend in FY 2021. Based on the current Coles share price, I estimate that it offers a forward fully franked 3.2% dividend yield.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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 Forget term deposits and buy Coles and this ASX dividend share appeared first on Motley Fool Australia.

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