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Forget cash! Here are 3 ASX dividend shares to own for income instead

Sebastian Bowen
Earning passive income

Keeping cash in the bank, either through chequing or savings accounts or even a term deposit, may feel safe and secure. But at interest rates of below 2%, the truth is that the buying power of your cash is not safe from the ravages of inflation – and is barely keeping afloat at best.

That’s why I far prefer ASX dividend shares. With dividend-paying shares, you can get yield of more than 3 or 4% right off the bat – and that’s not even including the possibilities of capital growth.

So here are 3 ASX dividend shares I would buy with my impotent cash in the bank today.

Woolworths Group Ltd (ASX: WOW)

The Woolworths share price might be a little stretched for many investors at its current valuation. However, that doesn’t stop this grocery giant from offering a grossed-up starting yield of 3.51% on today’s prices.

Woolworths is the largest grocery chain in the country and also owns Big W as well as a network of successful bottle shops – including Dan Murphy’s and BWS. Woolies is a highly defensive company, which means that if a recession or other kind of economic shock hits our economy, Woolworths’ earnings (and dividends) are unlikely to be impacted too severely.

Transurban Group Ltd (ASX: TCL)

Another highly defensive income stock, Transurban owns a vast network of tolled roads that permeate our biggest cities like Sydney, Melbourne and Brisbane. I can’t envisage a scenario in which the traffic volumes (as well as driver desire for the quickest travel routes) of our major cities go anywhere but up over the coming decades. Thus, I think this company offers earnings certainty of a unique quality.

Transurban shares currently offer a starting dividend yield of 3.84%, which (in my view) is likely to increase at a steady rate over the next few years.

Australia and New Zealand Banking Group (ASX: ANZ)

ANZ is the ASX bank that I think is offering the best bang for your buck on today’s prices. Although the ASX banking sector has had its fair share of woes over the last year or two, I think ANZ’s starting yield of 6.21% (or 8.07% grossed-up) today is too good to turn down.

Yes, this bank’s dividends now come only 70% franked these days (franking was reduced from 100% earlier this year), which will no doubt disappoint some investors. But I think this company is one of the best deals going on the markets today if you’re after pure income from your ASX shares.

The post Forget cash! Here are 3 ASX dividend shares to own for income instead appeared first on Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020