As was widely expected, on Tuesday the Reserve Bank kept rates unchanged at 0.75%. However, it appears to be only a matter of time until the central bank takes rates down one further notch.
According to the latest cash rate futures, a cut to 0.5% is being priced in as a near certainty by May of next year.
In light of this, if you haven't done so already, now might be a good time to switch from term deposits into ASX dividend shares. Three dividend shares that I would buy are listed below:
BWP Trust (ASX: BWP)
I think BWP could be a good option for investors. It is a real estate investment trust which generates the majority of its income as the landlord of hardware giant Bunnings. In FY 2019 BWP achieved like-for-like rental growth of 2.3%, which supported a 2% increase in its distribution to 18.1 cents per unit (excluding its special dividend). One positive with its business model is that management has good visibility on its future earnings. As a result, it remains confident that it will be in a position to increase its distribution further in FY 2020. At present its units offer a trailing 4.3% distribution yield.
Macquarie Group Ltd (ASX: MQG)
If you're not a fan of the big four banks after recent developments but still want a little exposure to banking, then I think Macquarie could be a great alternative. I believe Macquarie is well-positioned for solid long term profit and dividend growth due to the quality and diversity of its operations and its talented management team. At present I estimate that Macquarie's shares offer a partially franked forward dividend yield of 4.5%.
Telstra Corporation Ltd (ASX: TLS)
With rational competition returning to the telco industry and the arrival of 5G internet, I believe Telstra's outlook is improving greatly. In respect to the latter, I expect 5G to be a game-changer and feel Telstra's leadership position in mobile and its world class network will allow it to fully leverage the benefits of the new technology. Other positives include the early success of its T22 strategy at cutting costs dramatically and the near completion of the NBN rollout. All in all, I believe a return to growth isn't far away for the telco giant. At present its shares offer a trailing fully franked 4.3% dividend.
