As any income investor would know, it's a bleak time for savers. The Reserve Bank of Australia (RBA) cut the official cash rate at the start of the month to 1.25% – its lowest level ever. What's worse, we don't seem to be out of the woods yet, with many predicting that the RBA will cut rates at least once more in 2019. This means that your average savings account, even now barely giving you more than inflation, will be pretty much worthless by the end of the year. You may as well stick your cash under the bed. Or you could invest in income-producing assets like dividend shares. Although shares are inherently more risky than fixed-interest instruments, it's fast becoming the only mainstream option (outside property) if you want your money to actually get somewhere.
Here are three ASX dividend shares to consider if you want to beat that savings account rate, hands down
Macquarie Group Ltd (ASX: MQG)
Macquarie is also known as the 'fifth bank' on the ASX, but it is fundamentally different from one of the 'Big Four'. Macquarie is an investment bank, with earnings primarily coming from infrastructure, venture capital and asset management, rather than the mortgages and loans that would dominate the Commonwealth Bank of Australia (ASX: CBA) balance sheet. This gives Macquarie an internationally diversified income stream, which I think is a safer bet than a traditional bank. Macquarie is currently yielding a solid 4.55% (partially franked).
Woolworths Group Ltd (ASX: WOW)
Woolworths (as I'm sure everyone knows) is the largest supermarket chain in the country, but also owns discount retailer Big W as well as Endeavour Drinks (which owns the Dan Murphy's and BWS bottle shop chains) and ALH hotels (which runs a network of pubs, mostly in Queensland). This gives Woolworths a vast, defensive and diversified portfolio of assets that you can be reasonably sure will generate cash in all economic climates. Woolworths is paying a dividend yield of 2.81% (fully franked) on current prices.
South32 Ltd (ASX: S32)
South32 is a mining company that was spun off from BHP Group Ltd (ASX: BHP) in 2015. I like South32 because, unlike most of the big miners on the ASX, South32 isn't exposed to the iron ore price and mainly gets its revenue from mining aluminium, manganese, lead and silver. South32 is currently yielding 4.36% (fully franked), which is a healthy dividend for a resource stock (in my opinion).
Foolish takeaway
In my view, any of these stocks would be a much better place to have some of your hard-earned money in than a savings account in 2019. On current prices, I like Macquarie in particular, as it (in my opinion) offers a good balance between growth and income.
