All ASX shares have had a tough time in the last month. The coronavirus pandemic is denting confidence in every corner, and the ASX is no different. We now have our ASX banks trading at decade lows, resources shares dropping heavily and virtually all ASX blue-chips nursing losses.
But here's why its imperative that you have at least some exposure to ASX dividend-paying shares today if you're an investor who relies on income from your shares.
Overnight, the US Federal Reserve slashed interest rates again to practically zero. Earlier this month, our own Reserve Bank of Australia (RBA) reduced our cash rate to a record low of 0.50% and seems certain to cut again next month.
That means your bank account (or term deposit when it's up for renewal) is about to stop paying you any kind of real interest rate. If you thought the paltry rates we have been getting over the past year or two were bad, they're about to be a lot worse!
That means there's absolutely no benefit in holding cash as an investment anymore (although I'm not saying you shouldn't hold cash at all).
The only real alternative outside the property market? It's dividend-paying shares!
Now I get that it's a scary time to be investing. Shares have been dramatically falling in value over the last month – and it doesn't look like the volatility is going to be subsiding anytime soon.
But the beautiful thing about dividends is that the share price has very little to do with the dividend you can expect from some ASX shares.
Which ASX dividend shares are looking good today?
Now, of course, I'm not too bullish on the income potential of Qantas Airways Ltd (ASX: QAN), Sydney Airport Holdings Pty Ltd (ASX: SYD) or the ASX banks right now.
But consider another income stock – Transurban Group (ASX: TCL). Transurban shares are currently offering a 5.1% dividend yield on current prices. I don't expect extensive damage to this toll-road company's revenues from the current coronavirus situation and thus, I think it is a great ASX income share to buy today.
Telstra Corporation Ltd (ASX: TLS) is another dividend-giant with little direct exposure to a corona-induced slowdown (people aren't about to stop using smartphones and the internet to my knowledge). Telstra shares are offering a grossed-up dividend yield of 6.93% on current prices – now that's a lot better than a 1% savings account!
Foolish takeaway
Although the ASX share market is experiencing record volatility right now, dividend yields are not subject to the same kinds of pressures. Thus, with share prices the way they are right now, I think it's a great chance to lock in some quality dividend yield today – yield you can't get from cash anymore.
