Recent cash rate cuts and the Reserve Bank of Australia's dovish outlook may be bad news for income investors, but the good news is that the Australian share market has plenty of quality options to solve your income needs.
Two top dividend shares that I would buy this week are listed below:
Australia and New Zealand Banking Group (ASX: ANZ)
I would sooner be a buyer of ANZ's shares than have my funds in one of its high interest savings accounts right now. Especially given how the outlook for the banking sector has improved greatly in recent months following the conclusion of the Royal Commission, the potential recovery of the housing market, and APRA's decision to relax lending rules. I believe the latter two developments could lead to solid mortgage loan system growth in the next 12 months, which should support the big four banks' bottom lines. In addition to this, I believe ANZ could outperform its peers thanks to its attractive valuation, above-average dividend yield, cost-cutting opportunities, and potential share buybacks. ANZ's shares currently offer a trailing fully franked 5.8% dividend yield.
Telstra Corporation Ltd (ASX: TLS)
Another top option for income investors to consider in this low interest rate environment could be this telco giant. After a period of decline, I think Telstra is well-positioned to return to growth potentially as soon as FY 2020. This is due to its leadership position in the 5G market, the return of rational competition in the telco industry, and its plan to cut costs significantly through its T22 strategy. And based on the assumption that it cuts its final dividend down to 8 cents per share, I estimate that its shares offer an attractive fully franked 4.2% dividend yield.
