Although I continue to believe that Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four are trading at attractive levels even after strong share price gains this year, not all investors are keen on the banks.
So, if you're on the lookout for quality dividend options outside the banking sector, the three shares listed below could be the ones to buy. Here's why I like them:
BHP Group Ltd (ASX: BHP)
If you're happy buying resources shares then I think this mining giant could be a good alternative to the banks. I'm a big fan of BHP due to its world class, low cost operations and believe now is a good time to buy thanks to favourable commodity prices. Overall, I expect this to lead to BHP generating bumper free cash flows and returning significant funds to shareholders again in FY 2020. In light of this, I estimate that its shares currently provide a FY 2020 dividend yield of 6%.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
Another good alternative to the banks is the owner and operator of Sydney Airport. Although passenger numbers have been falling this year, I believe this will only be temporary and expect a return to growth in 2020. Overall, I believe the company is capable of growing its income and dividend at a decent rate over the coming years. Another bonus is that its status as a bond proxy should support its share price in the near term if the Reserve Bank continues to cut rates and push bond yields down. Sydney Airport's shares offer a 4.6% dividend yield at present.
Transurban Group (ASX: TCL)
A final alternative to consider is this toll road operator. It has been able to grow its distribution strongly over the last decade thanks to its high quality assets, increasing traffic, price increases, and acquisitions and developments. In FY 2020 this growth is expected to continue, with management providing distribution guidance of 62 cents per security. This will be a 5.1% increase year on year and equates to a forward 4.2% forward yield.
