The probability of the Reserve Bank of Australia cutting the cash rate at its next meeting in July has just increased materially following the release of the latest employment data on Thursday.
According to the latest ASX 30 Day Interbank Cash Rate futures contract, there is a now a 79% expectation of an interest rate decrease to 1% at the next meeting.
Whilst this is great news for borrowers, it will be another blow to savers and income investors who will have to contend with even lower interest rates for longer.
The good news is that the share market is here to save the day with a large number of dividend shares offering generous yields. Three that I would buy are listed below:
Accent Group Ltd (ASX: AX1)
Accent Group is the footwear-focused retail group behind retail chains including Athlete's Foot, HYPE DC, and Platypus. It also owns the exclusive licence to a number of popular international brands in Australia. In the first half of FY 2019 the company defied tough trading conditions in the retail sector by posting a 27.3% increase in net profit after tax to $32.2 million. This was driven by solid sales growth and strong gross margin improvement. Pleasingly, management expects further growth in the second half. It shares currently provide a trailing fully franked 6% dividend yield.
Adairs Ltd (ASX: ADH)
Another option for investors in the retail sector is this home furnishings retailer's shares. As with Accent Group, Adairs was a solid performer in the first half despite the tough trading conditions and housing market downturn. The good news is that with its online sales growing strongly, the housing market tipped to rebound in 2020, and consumer spending expected to increase following tax cuts, Adairs looks well-positioned for growth. At present, the company's shares offer investors a trailing fully franked 7% dividend yield.
Transurban Group (ASX: TCL)
A third dividend share to consider buying is this toll road operator. Thanks to the increasing popularity of its roads and periodic toll increases, Transurban has been able to grow its distribution each year over the last decade. I suspect that this will continue to be the case for the foreseeable future, making it an ideal option for income investors. At present its units offer a trailing 4% distribution yield.
