With the interest rates on offer from traditional interest-bearing assets at record lows, it certainly is a tough time to be an income investor.
But don't worry because the Australian share market is home to a large number of dividend shares with far better yields. Two to take a closer look at are listed below:
Fortescue Metals Group Limited (ASX: FMG)
If you're looking for very large yields and don't mind investing in the resources sector, then Fortescue could be worth a look. It is one of the world's leading iron ore producers and boasts some of the lowest costs in the industry.
At present Fortescue is pulling iron ore out of the ground with a C1 cost of just US$12.74 per wet metric tonne. This compares to the current iron ore price of US$176.90 per tonne. So with Fortescue on course to deliver record shipments in FY 2021, it is well-placed to record another bumper full year result.
One broker that is expecting this to be the case is Macquarie. The broker is forecasting a very generous dividend payment in FY 2021 of approximately $2.61 per share fully franked. Based on the current Fortescue share price, this equates to a massive 10.9% dividend yield.
Westpac Banking Corp (ASX: WBC)
Although the big four banks have rallied hard in recent months, they still offer investors potentially generous dividend yields now that APRA is allowing unrestricted dividend payments in 2021.
Especially given improving house prices and Australia's solid economic recovery from the pandemic. This could put the banks in a position to deliver modest growth in the coming years and reward shareholders for their patience.
In respect to Westpac, analysts at UBS are forecasting a $1.00 per share dividend in FY 2021 and then a $1.20 per share dividend in FY 2022. Based on the current Westpac share price, this represents fully franked ~5% and 5.9% dividend yields, respectively.
