If you're an income investor that's in need of dividends in the near future, then your options are limited due to the coronavirus crisis.
This crisis has put pressure on businesses to conserve cash and suspend dividends until the full impacts of the pandemic on the economy are known.
While this is disappointing, I believe the selloff of traditional dividend favourites has created an opportunity for income investors that can afford to be patient.
Three top dividend shares which I think will offer generous dividend yields in FY 2021 and beyond are listed below:
National Storage REIT (ASX: NSR)
This storage giant's shares are down 30% from their high. Investors were quick to sell the company's shares after coronavirus concerns scuppered any takeover deals that were in the works. I think this is a buying opportunity for investors and believe National Storage is well-placed to grow its distribution at a modest rate each year once the crisis passes. That's if its suitors don't return with new takeover approaches in 2021 when trading conditions return to normal. I estimate that National Storage's units offer a 5.6% Fy 2021 distribution yield.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
I think it could be worth taking advantage of Sydney Airport's sizeable share price decline by picking up its shares. While times are hard for the airport operator at the moment, I expect conditions in the industry to recover once the crisis passes. It may take a bit of time, but eventually Sydney Airport's traffic and distributions will return to normal levels. According to a note out of Goldman Sachs, it expects the company to pay a 29 cents per share distribution in FY 2021 and then a 37 cents per share distribution in FY 2022. This equates to a 5% and 6.4% yield, respectively. Combined with potential capital returns in the coming years, I think a patient investment could be very rewarding.
Transurban Group (ASX: TCL)
I think that this leading toll road operator could be a good long term option for income investors. Transurban's roads have unsurprisingly experienced a sharp reduction in traffic volumes due to lockdowns and travel restrictions. While this is likely to weigh on its income and ultimately its distributions in the short term, I expect the company to bounce back once restrictions ease. Especially given how lower fuel prices are likely to cut travel costs and encourage more drivers onto its toll roads. I estimate that its shares provide a 3.5% FY 2021 yield and a 4.5% FY 2022 yield.
