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Why I would buy Commonwealth Bank (ASX:CBA) and this ASX dividend share

Here’s why I would buy Commonwealth Bank of Australia (ASX:CBA) and this ASX dividend share for income this week…
The post Why I would buy Commonwealth Bank (ASX:CBA) and this ASX dividend share appeared first on Motley Fool Australia. –

Commonwealth Bank place Sydney NSW

With the interest rates on savings accounts and term deposits down to ultra low levels, it is getting very difficult to generate a sufficient passive income.

But don’t worry, because the share market is here to save the day! Two ASX dividend shares that I think would be great options for income investors are listed below:

Commonwealth Bank of Australia (ASX: CBA)

The first option for income investors to consider buying is Commonwealth Bank. With the government recently announcing plans to relax responsible lending rules, I expect conditions in the banking sector to improve in the near future. In light of this, I feel now could be a good time to pick up shares if you don’t already have exposure to the banking sector.

Especially given the decline in the Commonwealth Bank share price this year. At present the bank’s shares are trading 27% lower than their 52-week high. I feel this has left them trading on very attractive multiples for patient investors. And while forecasting the dividend that Commonwealth Bank will pay in FY 2021 is difficult, I expect a fully franked yield in the region of 4.5%.

National Storage REIT (ASX: NSR)

Another option for income investors to consider buying is this leading self storage operator. I think National Storage could be a top long term option because of its strong market position and growth through acquisition strategy. It is thanks largely to this strategy that the company has been able to grow its income and distribution at a solid rate over the last few years and even during FY 2020.

For the 12 months ended 30 June 2020, National Storage posted a 9% increase in underlying earnings to $67.7 million. And while its earnings could be flat at best in FY 2021 because of the crisis, I’m confident its growth will resume once it passes. Until then, based on the current National Storage share price, I estimate that it offers an attractive forward 4.2% distribution yield.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Why I would buy Commonwealth Bank (ASX:CBA) and this ASX dividend share appeared first on Motley Fool Australia.

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