With the market down significantly this month due to the coronavirus outbreak, the potential yields on offer with dividend shares has been widening considerably.
And whilst I suspect that dividend cuts will be quite common in August, I still expect many shares to offer above-average yields over the next 12 months.
Three dividend shares that I think income investors ought to consider buying when the market settles are listed below. Here's why I like them:
BHP Group Ltd (ASX: BHP)
Estimating what dividends companies will be paying over the next 12 months is increasingly difficult because of the uncertainty caused by the coronavirus outbreak. However, given the high prices that BHP is commanding for its iron ore at present, I believe it is safe to say that this mining giant will be paying more generous dividends in FY 2020 and FY 2021. Especially if Chinese stimulus measures lead to increasing demand for the steel making ingredient. At present I estimate its shares offer a fully franked forward 6% dividend yield.
Coles Group Ltd (ASX: COL)
Another dividend share to consider is this supermarket operator. It is one of the few companies on the Australian share market which has been benefitting from the coronavirus outbreak. This is due to the panic buying that has been sweeping across Australia which has left many of its shelves bare on a daily basis. I believe this demonstrates its defensive qualities and shows why it could be a great buy and hold option for investors. At present its shares offer an estimated forward fully franked 4% dividend yield.
Wesfarmers Ltd (ASX: WES)
A final option for income investors to consider is Wesfarmers. I believe it is well-positioned for growth over the next decade thanks to the quality and diversity of its portfolio of businesses. And while the coronavirus could impact its sales growth in the near term, I expect things to accelerate once the crisis passes. For now, I estimate that Wesfarmers' shares offer investors a forward fully franked 4.5% dividend yield.
