Australia Markets close in 1 hr 17 mins

Forget gold! Here’s how I would spend $10,000 on ASX dividend shares today

Sebastian Bowen
Dividend

You may have seen some coverage of the gold price recently. Gold spiked to US$1,600 an ounce on the back of the recent tensions in the Middle East yesterday and I’m sure many investors would have taken note.

But gold pays no yield and actually costs you money to hold in most cases. Thus, in this era of record low interest rates, I would much rather have ASX dividend-paying shares in my investing portfolio than lumps of yellow metal.

So here’s how I would spend $10,000 on dividend shares today.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is one of the most diversified businesses on the ASX. This giant conglomerate owns the Bunnings network of hardware stores, as well as the Kmart and Target discount chains for one. It also owns chemical and fertiliser producers, a work-gear clothing line, some mining interests and retains a 15% stake in Coles Group Ltd (ASX: COL). Its most recent acquisition has been Kidman Resources, a lithium producer.

Such a robust and diverse portfolio of interests gives me great confidence in this ASX company – and the reliability of its earnings and dividends throughout the economic cycle.

Speaking of dividends, Wesfarmers is boasting a trailing yield of 4.11% on current prices. Although this might change in 2020 due to the conclusion of the Coles divestment, I still think it will prove to be a formidable dividend stock in this new decade and beyond.

Australia and New Zealand Banking Group (ASX: ANZ)

The ANZ share price has been absolutely punished over the past 4 months, falling from around $28.70 to today’s level of $24.88. Just before Christmas, you could have picked up some ANZ shares for just $24.22!

The catalyst for this drop seems to have been the bank’s decision to reduce the level of franking credits that came with ANZ’s 2019 final dividend from 100% to 70%. The general woes of the ASX banking sector and the regulatory issues facing its brothers-in-arms Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) probably didn’t help either.

Still, ANZ shares offer a starting yield of 6.44% today – which grosses up to 8.78% even with the partial franking. That’s a hard yield to turn down in this low-interest rate world, and thus I think ANZ is a top buy for dividend income today.

Foolish takeaway

If I had $10,000 to spend, these 2 dividend shares would be on the top of my list to buy for ASX income today. Unlike gold, you would receive hefty dividends and franking credits every 6 months just from holding these 2 shares.

The post Forget gold! Here’s how I would spend $10,000 on ASX dividend shares today appeared first on Motley Fool Australia.

If you like the sound of that, make sure you also check out these Top 3 Dividend Shares To Buy For 2020

When Edward Vesely -- our resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 126%) and Collins Food (up 79%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.

In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.

Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.

Click here now to access this free report.

More reading

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia owns shares of National Australia Bank Limited and Wesfarmers Limited. 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