Keeping cash in the bank, either through chequing or savings accounts or even a term deposit, may feel safe and secure. But at interest rates of below 2%, the truth is that the buying power of your cash is not safe from the ravages of inflation – and is barely keeping afloat at best.
That's why I far prefer ASX dividend shares. With dividend-paying shares, you can get yield of more than 3 or 4% right off the bat – and that's not even including the possibilities of capital growth.
So here are 3 ASX dividend shares I would buy with my impotent cash in the bank today.
Woolworths Group Ltd (ASX: WOW)
The Woolworths share price might be a little stretched for many investors at its current valuation. However, that doesn't stop this grocery giant from offering a grossed-up starting yield of 3.51% on today's prices.
Woolworths is the largest grocery chain in the country and also owns Big W as well as a network of successful bottle shops – including Dan Murphy's and BWS. Woolies is a highly defensive company, which means that if a recession or other kind of economic shock hits our economy, Woolworths' earnings (and dividends) are unlikely to be impacted too severely.
Transurban Group Ltd (ASX: TCL)
Another highly defensive income stock, Transurban owns a vast network of tolled roads that permeate our biggest cities like Sydney, Melbourne and Brisbane. I can't envisage a scenario in which the traffic volumes (as well as driver desire for the quickest travel routes) of our major cities go anywhere but up over the coming decades. Thus, I think this company offers earnings certainty of a unique quality.
Transurban shares currently offer a starting dividend yield of 3.84%, which (in my view) is likely to increase at a steady rate over the next few years.
Australia and New Zealand Banking Group (ASX: ANZ)
ANZ is the ASX bank that I think is offering the best bang for your buck on today's prices. Although the ASX banking sector has had its fair share of woes over the last year or two, I think ANZ's starting yield of 6.21% (or 8.07% grossed-up) today is too good to turn down.
Yes, this bank's dividends now come only 70% franked these days (franking was reduced from 100% earlier this year), which will no doubt disappoint some investors. But I think this company is one of the best deals going on the markets today if you're after pure income from your ASX shares.
