According to the latest Westpac Banking Corp (ASX: WBC) Weekly economic report, its economics team continues to expect the Reserve Bank to cut rates again before the end of the year.
This will bring the cash rate down to a record low of 1% and put significant pressure on the interest rates offered with term deposits and savings accounts.
In light of this, I think now would be a good time to consider looking at some of the generous dividend options that the Australian share market has to offer.
Three which I would buy are listed below:
Coles Group Ltd (ASX: COL)
One of my favourite buy and hold dividend options on the Australian share market is this supermarket giant. I'm a big fan of Coles due to its leading position in a highly defensive industry and management's focus on margin improvement through automation. If management succeeds with the latter, it should put the company in a position to achieve solid profit and dividend growth over the medium to long term. Based on its policy of paying out 80% to 90% of its earnings as dividends, I estimate that its shares currently provide a forward fully franked 4.1% dividend yield.
Telstra Corporation Ltd (ASX: TLS)
Another dividend option to consider buying is this telco giant. Although its shares have been strong performers in 2019 due to its improved performance and the success of its T22 strategy, I still see a lot of value in them. Especially now the telco giant has begun to cut its dividend to a sustainable level. In the first half Telstra reduced its interim dividend to 8 cents per share and is widely expected to do the same with its final dividend in August. At 16 cents per share, Telstra still offers an attractive fully franked 4.2% dividend yield.
Westpac Banking Corp
Due to the low interest rates being offer by its savings accounts, I would rather invest in this banking giant's shares than leave my money in one of its accounts. Especially now that the housing market is showing signs that a rebound is on the cards in the near term. This could drive mortgage loan growth, boost the bank's bottom line, and support its dividend. At present Westpac's shares provide a very generous trailing fully franked 6.7% dividend yield.
