With the share market pulling back again today, a number of dividend shares have been dragged lower with it.
Three dividend shares that I think are in the buy zone are listed below. Here's why I like them:
BHP Group Ltd (ASX: BHP)
If you don't mind investing in the mining sector then the Big Australian could be a great option for you. I think it is the best mining share on the Australian share market due to its world class operations, their low costs, and its strong cash flow generation. The latter is why I believe income investors should be considering it. With its balance sheet in a very strong position, I suspect the majority of its free cash flow will make its way back to shareholders through dividends. Based on this, I estimate that its shares offer a forward fully franked 5.5% dividend yield.
Rural Funds Group (ASX: RFF)
Rural Funds is an agriculture-focused property group which continues to forecast growth in the near term despite the pandemic. This is possible due to the long-term tenancy agreements and periodic rent increases it has for its diverse portfolio of agricultural assets. Based on its guidance, Rural Funds' units currently offer a forward 5.6% distribution yield. Not only is this a very generous yield, but the company pays its distribution in quarterly instalments. This could make it a good option for investors looking for a more regular source of income.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
If you're not necessarily in need of immediate income, then it could be worth taking advantage of Sydney Airport's sizeable share price decline. As I mentioned here earlier this week, analysts at Goldman Sachs expect the airport operator to start recovering from the pandemic in the coming months. In light of this, it has pencilled in a 29 cents per share distribution in FY 2021 and then a 37 cents per share distribution in FY 2022. If this proves accurate, it will mean yields of 5% and 6.3% for those two financial years. This could make it worth being patient with its shares.
