Last week the Reserve Bank of Australia held its monthly meeting and elected to keep the cash rate on hold at 0.75%.
But it may not be long until the central bank takes rates lower again according to the Westpac Banking Corp (ASX: WBC) economics team.
According to its latest Westpac Weekly report, the bank’s chief economist, Bill Evans, has pencilled in a rate cut to 0.5% at the April meeting.
After which, he expects a final cut to be made in August, bringing the cash rate down to a lowly 0.25%.
If this forecast proves accurate, it will be bad news for income investors who will have to contend with ultra low rates.
The good news is that there are plenty of quality dividend shares that can help you beat the rate cuts. Two to consider buying are listed below. Here’s why I like them:
Stockland Corporation Ltd (ASX: SGP)
One top option to consider buying to beat the rate cuts is Stockland. This property company owns, manages and develops a diverse range of quality assets such as retail centres and residential properties. Pleasingly, after a strong FY 2019, Stockland has started the new financial year in a positive fashion. In light of this, the company recently reiterated its plan to pay a 27.6 cents per share distribution in FY 2020. This equates to a forward 5.6% distribution yield.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
Although the coronavirus outbreak is likely to weigh on international passenger numbers in the first quarter of 2020, I believe this is now reflected in its share price. And as long as the outbreak doesn’t drag on for too much longer, I expect Sydney Airport to deliver modest income and distribution growth this year. This could make it a good option for investors, especially if rates go lower. At present the airport operator’s shares offer an estimated forward 4.6% dividend yield.
The post Westpac tips two cash rate cuts in 2020 appeared first on Motley Fool Australia.
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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings 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