Although the Reserve Bank of Australia didn't cut rates this week, many economists believe it will make a final cut to 0.5% early next year.
If this occurs, it is likely to put further pressure on the interest rates being offered with term deposits and savings accounts.
But don't worry about these ultra-low interest rates, because the Australian share market is home to a large number of dividend shares offering significantly better yields.
Three dividend shares that I think are perfect for this low interest environment are listed below. Here's why I like them:
BHP Group Ltd (ASX: BHP)
BHP has rewarded its shareholders handsomely over the last 12 months with big dividends thanks to a combination of asset sales, favourable commodity prices, and a bumper profit result. Pleasingly, I believe it remains well-placed to repeat this in FY 2020. In light of this, I estimate that its shares currently offer a fully franked forward 6% dividend yield.
Scentre Group (ASX: SCG)
Scentre Group is the owner of Westfield properties in the ANZ region. A recent update shows that these properties welcomed 535 million customer visits through their doors over the last 12 months. This led to strong demand for its tenancies from retailers, leading to 99.3% of its portfolio being leased in September. I believe this puts Scentre in a good position to grow its distribution at a modest rate in the future. At present its units offer a forecast forward 5.8% distribution yield.
Wesfarmers Ltd (ASX: WES)
With the housing market improving, I think now could be a good time to buy this conglomerate's shares. This is because its key Bunnings, Kmart, and Target brands all have exposure to the housing market. If house prices continue to rise, so too could demand for home-related goods. This could drive solid earnings growth and support further dividend increases. I estimate that Wesfarmers will pay a FY 2020 dividend of $1.53 per share, which equates to a fully franked 3.75% dividend yield.
