With interest rates at record lows and likely to go even lower over the remainder of 2020, I continue to believe that ASX dividend shares would be better options than term deposits or savings accounts.
Three top dividend shares that offer generous yields are listed below. Here's why I would buy them:
National Australia Bank Ltd (ASX: NAB)
I think NAB would be a great option for income investors right now. This is due to its attractive valuation, generous dividend yield, and improving performance. In respect to the latter, earlier this month NAB delivered a stronger than expected first quarter update. I believe this demonstrates how robust its business is and expect more of the same over the remainder of FY 2020 and into the next financial year. This year I expect NAB to pay a $1.66 per share fully franked dividend, which equates to a dividend yield of 6.2%.
Telstra Corporation Ltd (ASX: TLS)
Another option for income investors to consider buying is this telco giant. I have been impressed with the progress the company has made with its T22 strategy and expect it to lead to solid profit growth once the NBN rollout is complete. Especially given the return of rational competition and the arrival of 5G internet. Until then, I feel confident its free cash flows will be able to support its current 16 cents per share dividend. This equates to a fully franked 4.45% dividend yield.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
A final dividend option to consider buying is this ETF. I like the Vanguard Australian Shares High Yield ETF due to its diversity and its generous yield. As its name implies, the Vanguard Australian Shares High Yield ETF gives investors the opportunity to invest in 60 of the highest paying dividend shares on the Australian share market. This includes popular dividend shares such as BHP Group Ltd (ASX: BHP), Telstra, and the big four banks. It currently offers income investors a forecast forward 5.3% dividend yield.
