Why I would buy these ASX dividend shares in October

Here’s why I think income investors should be buying Coles Group Ltd (ASX:COL) and this ASX dividend share right now…
The post Why I would buy these ASX dividend shares in October appeared first on Motley Fool Australia. –

dividend shares

If you’re on the lookout for some new dividend shares, then I think the ones listed below would be well worth considering.

Here’s why I think they would be great options for income investors in October:

Coles Group Ltd (ASX: COL)

The first ASX dividend share that I would buy this month is Coles. Since the supermarket operator was spun out of Wesfarmers Ltd (ASX: WES) in 2018, it has been onwards and upwards for its shares. The good news is that I don’t believe it is too late to invest.

I believe Coles is well-placed to grow its earnings and dividend at a solid rate over the next decade. This is thanks to its defensive earnings, refreshed strategy, expansion opportunities, and its focus on automation. The latter is expected to cut costs and support its margins in the coming years. For now, based on the current Coles share price, I estimate that its shares offer investors a fully franked 3.5% FY 2021 dividend.

Telstra Corporation Ltd (ASX: TLS)

Following a sharp pullback in its share price over the last couple of months, I think this telco giant would be a great ASX dividend share to buy. While there are concerns that Telstra will cut its dividend down to 12 cents per share in FY 2021 because of its softer than expected earnings guidance, I’m optimistic this won’t be the case.

This is because a shift to a more appropriate free cash flow based dividend policy would allow for it to be maintained if it achieves its guidance. But either way, both dividends offer above average yields. Based on the current Telstra share price, a 12 cents per share dividend will provide a fully franked 4.3% yield. Whereas if it maintains it at 16 cents, it will provide a very generous 5.8% yield.

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Returns As of 6th October 2020

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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 and has recommended Telstra Limited. 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 Why I would buy these ASX dividend shares in October appeared first on Motley Fool Australia.

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