According to the latest weekly economic report by Westpac Banking Corp (ASX: WBC), Australia's oldest bank continues to expect the cash rate to remain on hold at the record low of 0.25% until at least December 2021.
If this proves accurate, it is likely to be some time (potentially many years) before the interest rates on offer with savings accounts and term deposits return to more normal levels.
In light of this, I think the share market continues to be the best place for investors to look for a source of income right now.
But which dividend shares should you buy? Here are two that I think are great options:
Commonwealth Bank of Australia (ASX: CBA)
If you're not averse to investing in the banking sector, then I believe the recent pullback in the Commonwealth Bank share price could be a buying opportunity. Times certainly are hard for the big four banks, but things will soon improve. This could make it worth investing in the banks and patiently holding on over the coming years. Especially given the generous yield on offer with Commonwealth Bank's shares. Even after factoring in a sizeable cut to its dividend in FY 2021, I estimate that its shares provide a forward fully franked yield of ~6%.
Wesfarmers Ltd (ASX: WES)
But if you're not a fan of the banks, then I think Wesfarmers could be a good alternative right now. The conglomerate looks set to be a positive performer in FY 2020 despite the coronavirus pandemic. This is because of the strong demand that its Bunnings business is experiencing during the crisis thanks to a sharp uptick in home improvements. Given that Bunnings contributes almost two-thirds of its total earnings, I expect Wesfarmers to have a strong finish to the financial year. Outside the current trading conditions, I like the company due to the quality and diversity of its portfolio and its positive long term growth prospects. I estimate that its shares currently offer a forward fully franked 4% dividend yield.
