Based on recent economic data, I think it is highly unlikely that the Reserve Bank will be lifting the cash rate any time soon.
While this is good news for borrowers, it is the very opposite for income investors.
Fortunately, all is not lost. This is because there are a large number of dividend shares on the Australian share market that offer vastly superior yields.
Two which I think income investors ought to consider buying are listed below:
Rural Funds Group (ASX: RFF)
I think that Rural Funds is one of the best ASX dividend shares on the local market. This is due to the quality of its assets, their blue chip tenants, and their ultra-long tenancy agreements. In respect to the latter, at the last count Rural Funds had a weighted average lease expiry profile of 11.5 years.
In addition to this, the company has fixed rental increases built into its tenancies. This means management has great visibility on its future earnings and also its distributions. As a result, it has been able to reaffirm its distribution guidance for both FY 2020 and FY 2021. For next year it intends to lift its distribution by 4% to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a yield of 5.5%.
Telstra Corporation Ltd (ASX: TLS)
There certainly is a lot of debate about the Telstra dividend. Some analysts believe the telco giant will have to cut its dividend further in the near future, others believe its forecast free cash flows will be sufficient to maintain it. I'm in the latter group and feel confident that 16 cents per share will be the bottom, even after the NBN compensation ends.
This is thanks to the cost savings being made by its T22 strategy, rational industry competition, and the easing of the NBN headwind. Based on the current Telstra share price, this will mean a fully franked 4.7% dividend yield.
