The probability of a rate cut by the Reserve Bank next month just keeps getting higher.
According to the latest cash rate futures, the market is now pricing in an 82% probability of a cut to zero at the November meeting.
While the market doesn't always get it right, it does seem almost inevitable that one is coming.
But don't worry if you're an income investor, because there are plenty of dividend shares offering generous dividend yields that smash those on offer with term deposits and savings accounts.
Two ASX dividend shares that I would buy are listed below:
BWP Trust (ASX: BWP)
BWP is the largest owner of Bunnings properties in the Australian market. It currently has 68 warehouses leased to the home improvement giant, which makes up the vast majority of its rental income. This has proven to be a very good thing in 2020. At a time when many retailers have been deferring rental payments because of the pandemic, BWP was able to collect its rent largely as normal.
So much so, in FY 2020 the company reported a 1% increase in profit before gains on investment properties to $117.1 million. Impressively, including property gains, BWP's profit was up 24.4% to $210.6 million. The latter reflects the strength of its Bunnings tenancies. I'm confident there will be more of the same in FY 2021 and expect a distribution of 18.3 cents per share to be paid. Based on the current BWP share price, this works out to be an attractive 4.45% yield.
Coles Group Ltd (ASX: COL)
A second ASX dividend share to buy is Coles. I think the supermarket giant would be a top option due to its strong market position, positive growth prospects, and defensive qualities. The latter was on display in FY 2020 when Coles delivered an impressive full year result. It achieved sales growth of 6.9% to $37.4 billion and net profit after tax growth of 7.1% to $951 million.
Thanks to its strong start to FY 2021, I feel Coles is in a position to deliver another solid result this year. And with the company aiming to pay upwards of 90% of its earnings back to shareholders, I expect another generous dividend payment. Which, based on the current Coles share price, I estimate offers a forward fully franked ~3.5% dividend yield.
