The good news for income investors in this low interest environment is that the Australian share market is home to a large number of dividend-paying companies.
Two ASX dividend shares which I think are in the buy zone right now are listed below. Here's why I like them:
Dicker Data Ltd (ASX: DDR)
The first dividend share to consider buying is Dicker Data. It is a wholesale distributor of computer hardware and software. Due to an increasing number of vendor relationships and robust demand for information technology products, Dicker Data has been growing its earnings and dividends at a strong rate over the last five years.
Pleasingly, this has continued this year despite the pandemic. At the end of April the company revealed that it had experienced a surge in demand for remote working products because of the work from home initiative. So much so, its first quarter profit before tax jumped 36.3% to $18.4 million. Management appears confident this strong form will continue and is planning to increase its FY 2020 dividend to 35.5 cents per share fully franked. This will be a 31% increase on last year's dividend, which also included a 5 cents per share special dividend. This equates to an attractive 4.9% dividend yield.
Telstra Corporation Ltd (ASX: TLS)
A second dividend share that I believe is in the buy zone is Telstra. With its medium term outlook arguably looking the brightest it has been in a long time, I think now is a great time to invest in this telco giant. This improving outlook is due to its T22 strategy, rational competition, and the easing of the NBN headwind.
While the NBN headwind is still here, peak pain from it is on the horizon. This should make a return to growth possible in the not so distant future. In fact, Telstra would have returned to growth in the first half were it not for this headwind. Underlying operating earnings excluding the in-year NBN headwind grew by approximately $90 million. In the meantime, I'm confident its free cash flows are sufficient to maintain its 16 cents per share fully franked dividend. This represents a very attractive 5.1% dividend yield.
