Later today the Reserve Bank of Australia will meet to discuss the cash rate.
While a full rate cut to zero seems unlikely, a number of economists believe a partial cut down to 0.1% from 0.25% could happen.
This would be great news for borrowers, but certainly not for savers and income investors who will have to contend with even lower interest rates.
Luckily for the latter group, the Australian share market is home to a large number of dividend shares that can help you beat these low rates.
Two that I would buy are listed below:
Dicker Data Ltd (ASX: DDR)
The first ASX dividend share I would buy 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. This has continued even during the pandemic thanks to the work from home initiative and the shift to the cloud. Based on the current Dicker Data share price, I estimate that it offers a fully franked forward 4.55% dividend yield.
Telstra Corporation Ltd (ASX: TLS)
I think this telco giant would be a great option for income investors due to its improving outlook. This is due to its T22 strategy, 5G internet, and the easing of the NBN headwind. Combined, I believe a return to earnings and dividend growth could be on the cards in the coming years. In the meantime, I believe its 16 cents per share dividend is sustainable if it shifts its dividend policy to be based on free cash flow. Based on the latest Telstra share price, investors would receive a very generous fully franked 5.65% dividend yield if it does sustain its current payout in FY 2021.
