Although the Reserve Bank of Australia (RBA) left interest rates on hold yesterday, there's still no relief for anyone who likes to keep a substantial amount of their wealth in cash. No matter where you turn, the truth is that no cash instrument (whether it's a savings account or a term deposit) really offers an inflation-beating interest rate return in the current environment.
That's where dividend shares come in. ASX dividend-paying shares can offer you a return that's often more than triple what you can get from a term deposit.
Here are 3 ASX dividend shares that I think are worthy of consideration to replace your cash investments.
InvoCare Ltd (ASX: IVC)
InvoCare is the largest funeral provider in the country, owning a range of funeral/crematoria brands such as White Lady Funerals, Le Pine Funerals and Simplicity. I like this business as it operates in an industry that is (unfortunately) always going to have demand. IVC shares are today trading for $13.12 – in the middle of their 52-week range after sliding back from the $16.70 levels we saw earlier this year. On today's prices, IVC shares offer a solid dividend yield of 2.8%.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is one of the largest employers in Australia – owning the Bunnings network of hardware stores, as well as Target, Kmart, and Officeworks chains and a 15% stake in Coles Group Ltd (ASX: COL). Such a wide range of well-run business gives this company a highly diversified earnings base and enables Wesfarmers to pay a solid dividend, which I estimate will come in around 4% for FY20 on current prices.
National Australia Bank Ltd (ASX: NAB)
Everyone knows that the big banks offer huge dividend yields and NAB is no different. However, NAB did surprise investors earlier this year when it slashed its $1.98 per share dividend back to $1.72 per share.
Even after this cut, NAB is offering a yield of 6.54% on today's prices (which scales up to 9.34% if franking is included). Now its dividend has been dropped to a (hopefully) more sustainable level, I think it is a compelling buy for income today.
Foolish takeaway
With these three ASX dividend shares, you can put your impotent term deposits to work and have some inflation-beating dividend yields working for you. Wesfarmers is still looking a little pricey on today's market but in my view, NAB and InvoCare both offer some value for money on current prices.
