According to the latest cash rate futures, the market is now pricing in a 60% probability of a rate cut to zero by the Reserve Bank next month.
Whether or not the central bank makes a move again next month remains unclear. But one thing which is abundantly clear is that rates are going to be stuck at ultra low levels for some time to come.
Westpac Banking Corp (ASX: WBC), for example, expects the cash rate to remain at 0.25% for as far out as its forecasts go. This means at least January 2022 at present, but could be even longer.
And let's not forget that rates don't just jump from 0.25% back up to 3%. Once the cash rate starts to increase, it'll be a gradual process over a number of years.
All in all, I wouldn't be overly surprised if it were five years or so until the cash rate returned to normal levels again.
In light of this, I continue to believe that income investors would be best turning to the share market for a source of income.
But which shares should you buy? Here are two top ASX dividend shares I would buy to beat low rates:
Coles Group Ltd (ASX: COL)
I think this supermarket giant would be a good option for income investors. While it may not provide the biggest yield on the local share market, I believe it is one of the safest. This is due to its defensive operations, solid growth prospects, and cost cutting plans. Coles shares currently offer an estimated forward ~3.9% dividend yield.
Telstra Corporation Ltd (ASX: TLS)
The last five years have been difficult for Telstra due to the launch of the NBN. However, with peak pain from the NBN rollout on the horizon, this headwind is close to subsiding. In light of this and its T22 strategy, I'm confident that the next five years will be materially better. This and its 5.3% fully franked dividend yield could make Telstra a good option for income investors.
