If you're looking for a source of income in this low interest rate environment, then the dividend shares listed below could be good options for you.
Here's why I think these three ASX dividend shares are in the buy zone right now:
Coles Group Ltd (ASX: COL)
One of my favourite dividend shares on the Australian share market is Coles. I'm a big fan of the supermarket operator due to its defensive qualities and solid growth prospects. The latter is thanks to its leading position in the industry and its refreshed strategy. The latter will see Coles aim to deliver $1 billion in cumulative savings by FY 2023. It expects to achieve this through efficiencies and the use of automation. I expect this and its same store sales growth to support solid earnings and dividend growth over the next five years. At present I estimate that its shares offer a forward 3.9% dividend yield.
Rural Funds Group (ASX: RFF)
Rural Funds is an agriculture-focused property group. I think it would be a good option for income investors due to its positive long-term distribution outlook. Rural Funds has good visibility on its future earnings thanks to its long-term tenancy agreements and the periodic rent increases that are built into contracts. Pleasingly, the company has been unaffected by the coronavirus pandemic and reaffirmed its distribution guidance this month. Rural Funds expects to pay 10.85 cents per share in FY 2020 and 11.28 cents per share in FY 2021. This equates to yields of 5.7% and 5.9%, respectively.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
A final option for income investors to consider buying right now is the Vanguard Australian Shares High Yield ETF. I like this exchange traded fund due to its diversity and generous yield. This is because the fund invests in many of the most popular and highest yielding dividend shares on the ASX. This includes mining giants, the big four banks, and Telstra Corporation Ltd (ASX: TLS). At present I estimate that it provides a forward ~80% franked 5.3% dividend yield.
