A speech by Reserve Bank of Australia Governor Philip Lowe on Wednesday revealed that the central bank could just as easily cut rates as raise them when it next makes a move.
While this doesn't necessarily mean a rate cut is on the way, I feel it is a sign that the Australian economy is some way off being ready for a hike.
In light of this, I think income investors ought to prepare for potential a few more years of rates at low levels.
Three quality dividend shares that could be great ways to generate income in this low interest rate environment are listed below. Here's why I like them:
Australia and New Zealand Banking Group (ASX: ANZ)
My favourite option in the banking sector right now is ANZ. This is due to the belief that it is the best positioned bank to face into the sector's slowing revenue environment. This is largely due to cost cutting opportunities, low bad debts, and its exposure to a business lending market which is growing at a solid rate. Another bonus is that its shares are still trading on lower than average multiples even after its rally this week. ANZ's shares currently offer a trailing fully franked 5.9% dividend.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
I think that Sydney Airport is a great option for income investors due to its position as the main gateway into Australia. Although there have been concerns over recent domestic passenger numbers, this has been blamed on inclement weather. I expect passenger numbers to return to growth in FY 2019, putting Sydney Airport on track to raise its dividend once again. At present Sydney Airport's shares offer investors a trailing 5.5% dividend.
Wesfarmers Ltd (ASX: WES)
Another good option for income investors to consider is Wesfarmers. I believe the quality of the conglomerate's businesses and the potential for earnings accretive acquisitions or capital management initiatives in the near term, make its shares great value at the current level. Especially as its shares offer a generous estimated 5.7% dividend at present.
