On Thursday Reserve Bank Governor Philip Lowe confirmed that he expects rates to remain at ultra low levels for years.
While this is good news for borrowers, it is a blow for income investors that rely on the interest generated by term deposits and savings accounts.
But don't worry, because the Australian share market is home to a large number of quality ASX dividend shares offering generous yields.
Two that I would buy are listed below:
BHP Group Ltd (ASX: BHP)
I think the Big Australian would be a good ASX dividend share for income investors that are looking for a little exposure to the resources sector. Although there are a lot of options in the sector, I think BHP is the top pick right now. This is due to its world class operations, low costs, and strong cash flow generation.
Another positive is the high iron ore prices that the company is currently commanding. I believe this has put BHP in a position to reward its shareholders with sizeable dividends again in 2020 and 2021. At present, I estimate that its shares offer a forward fully franked 5.5% dividend yield.
Commonwealth Bank of Australia (ASX: CBA)
The big four banks have been flying high this week after investors returned to them en masse. This appears to have been driven by optimism that the economic damage caused by the pandemic won't be as great as previously expected. Which could even mean a reversal on some of the provisions they have made in recent weeks.
Nevertheless, I still expect the Commonwealth Bank to make a reasonably sharp dividend cut in FY 2021 to ~$3.70 per share. However, even after this cut and strong share price gain this week, its shares will still provide a very generous fully franked forward 5.6% dividend yield.
