With interest rates likely to fall next year, it seems apparent that we are now witnessing peak term deposits for this current cycle.
In light of this, investors may be better off looking to the share market for their income needs.
But which ASX dividend stocks could be good alternatives to term deposits? Let's look at three that analysts are tipping as buys:
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Endeavour Group Ltd (ASX: EDV)
Endeavour Group could be an ASX dividend stock to buy instead of term deposits. It is the leader in the Australian alcohol retail market through its store brands Dan Murphy's and BWS. It also owns the ALH Hotels business, which has over 350 licensed venues across the country.
Goldman Sachs likes Endeavour due to its market leadership position and the defensive nature of the alcohol retail market.
It is expecting this to underpin fully franked dividends of 20 cents per share in FY 2025 and then 22 cents per share in FY 2026. Based on the current Endeavour share price of $4.29, this will mean dividend yields of 4.7% and 5.1%, respectively.
Goldman also sees plenty of upside for its shares with its buy rating and $5.50 price target.
Rural Funds Group (ASX: RFF)
Another ASX dividend stock to consider buying is Rural Funds.
It is a property company that owns a portfolio of assets across a number of agricultural industries. This includes almond and macadamia orchards, premium vineyards, water entitlements, cropping and cattle farms, which are all leased to major industry players on long term contracts.
Bell Potter is tipping its shares as a buy and expects some very attractive dividend yields in the near term. It is forecasting dividends per share of 11.7 cents in FY 2025 and then 12.2 cents in FY 2026. Based on the current Rural Funds share price of $1.86, this will mean yields of 6.3% and 6.6%, respectively.
The broker has a buy rating and $2.50 price target on its shares.
Telstra Group Ltd (ASX: TLS)
Finally, telco giant Telstra could be a great alternative to term deposits for income investors.
It is also being tipped as an ASX dividend stock to buy by analysts at Goldman Sachs. They believe that the company is well-placed to deliver low risk earnings and dividend growth in the coming years.
In respect to the latter, Goldman is forecasting fully franked dividends of 19 cents per share in FY 2025 and then 20 cents per share in FY 2026. Based on the current Telstra share price of $3.89, this represents dividend yields of 4.9% and 5.15%, respectively.
The broker currently has a buy rating and $4.35 price target on its shares.
