According to the latest cash rate futures, the market is currently pricing in an 84% probability of a rate cut to zero by the Reserve Bank next week.
While this is more good news for borrowers, it will be another bitter blow for income investors who will have to contend with even lower rates.
But don't worry if you're part of the latter group, as there are a number of quality dividend shares that will help you beat low interest rates.
Two that I would buy are listed below. Here's why I like them:
BWP Trust (ASX: BWP)
The first dividend share I would buy is BWP. It is a real estate investment trust (REIT) that invests in and manages commercial assets. The majority of its assets are leased to home improvement giant, Bunnings Warehouse, which has proven to be a big positive during the pandemic. At a time when many retail landlords have struggled to collect rent, business has been booming for Bunnings, allowing BWP to collect rent largely as normal.
Looking ahead, with tax cuts and government stimulus likely to support solid sales growth for Bunnings in the years ahead, I believe BWP is well-positioned to continue increasing its rental income and growing its distribution. Based on the current BWP share price, I estimate that it offers investors a forward 4.4% yield.
Rural Funds Group (ASX: RFF)
Another option for investors to consider buying is fellow property company Rural Funds. It owns a diversified portfolio of high quality Australian agricultural assets that are leased to experienced agricultural operators. The company's revenues are derived from long-term leases across five sectors: almonds, cattle, vineyards, cropping and macadamias.
Given their ultra-long leases and built-in rental increases, I believe Rural Funds is perfectly positioned to continue growing its rental income and distribution at a solid rate over the next decade. In FY 2021, the company plans to increase its distribution by 4% to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a generous 4.6% yield.
