With savers facing yet another year of record low rates, I believe those in search of income should consider one of the large number of high-quality dividend shares on the ASX.
Here are four top dividend shares I would buy in January:
BHP Group Ltd (ASX: BHP)
BHP has been generating significant levels of free cash flow from its world class operations in recent times. I expect this trend to continue in FY 2020 thanks to favourable commodity prices and the easing of the trade war. And with management intent on returning the majority of its free cash flow to shareholders as dividends, BHP could be a great option for income investors. I estimate that BHP's shares provide a fully franked forward 5.5% dividend yield.
Coles Group Ltd (ASX: COL)
One of my favourite long term options is Coles. I'm a big fan of the supermarket giant due to its defensive qualities, strong market position, its refreshed strategy, and its focus on automation. Combined, I think Coles is well-placed to grow its earnings at a solid rate over the next decade. And due to its favourable dividend policy, this bodes well for shareholders. At present, I estimate that its shares provide a fully franked forward 3.6% dividend yield.
National Australia Bank Ltd (ASX: NAB)
I think NAB could be worth considering in January if you don't already have meaningful exposure to the banks. Although it has been tough for the bank in recent months and a capital raising is likely for NAB this year, I feel the selloff of its shares has been overdone and created a buying opportunity. Especially considering the positive signs emanating out of the housing market. If the cycle is now changing, it could be supportive of mortgage loan growth over the coming years and underpin NAB's earnings. Another positive is its generous yield. Even after factoring in a probable dividend cut in FY 2020, I estimate that its shares offer a forward fully franked 6.3% dividend yield.
Super Retail Group Ltd (ASX: SUL)
Another high yield dividend share to consider is Super Retail – the retail group behind chains such as Macpac, Rebel, and Super Cheap Auto. It has been a solid performer in recent years and has carried this momentum over into the new financial year. As a result, I'm confident that Super Retail is well-placed for further profit and dividend growth in FY 2020. Its shares currently offer a trailing fully franked 5% dividend yield.
