Unfortunately for income investors, it looks increasingly likely that interest rates will stay at close to zero for a number of years to come.
The good news is that there are alternatives to term deposits and savings accounts. At present, there are a number of shares on the Australian share market offering investors generous yields.
Here are two ASX dividend shares I would buy:
Aventus Group (ASX: AVN)
The first ASX dividend share to buy is Aventus. While retail property might not be something you would think to invest in right now, I would suggest you reconsider this. Aventus is a very different beast to other retail properties companies. It owns and operates 20 large format retail parks across Australia. Positively, these centres have a high weighting towards everyday needs. It counts major retailers such as ALDI, Bunnings, Officeworks, and The Good Guys among its 593 tenancies.
This weighting has proven to be a very positive thing during the pandemic and allowed Aventus to collect the vast majority of its rent as normal in FY 2020. This led to the company reporting a 4.2% increase in funds from operations (FFO) to $100 million. I'm expecting a similarly solid year in FY 2021. Based on this and the current Aventus share price, I estimate that it offers a generous 5% yield.
Rural Funds Group (ASX: RFF)
Another dividend share which has continued its positive form this year is Rural Funds. It is a real estate investment trust that owns a diversified portfolio of high quality agricultural assets across Australia. This includes macadamia orchards, cattle assets, cotton assets, vineyards, and almond orchards. These assets are leased to some of the most experienced agricultural operators in the country such as Treasury Wine Estates Ltd (ASX: TWE) and Select Harvests Limited (ASX: SHV).
In FY 2020, Rural Funds delivered an 8% increase in property revenue to $72 million. This allowed the company's board to increase its distribution by its target rate of 4% per annum. Pleasingly, more of the same is expected in FY 2021 thanks to its long term tenancy agreements and periodic rent increases. Management intends to increase its distribution by 4% again to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a 4.7% yield.
