Telstra (ASX:TLS) and this dividend share have been named as buys

These two dividend shares have been rated as buys…

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Luckily for income investors, the Australian share market is home to a good number of quality dividend shares.

Two that are highly rated right now are listed below. Here's what you need to know about them:

Coles Group Ltd (ASX: COL)

The first ASX dividend share to look at is this supermarket giant. Over a century after GJ Coles opened his first store in Collingwood, Victoria in 1914, Coles has gone on to become one of Australia's most recognisable brands and one of the big two players in the supermarket industry.

The company now has 800 supermarkets across the country, over 900 liquor retail stores, and over 700 Coles express stores. From this vast network, the company processes more than 21 million customer transactions each week. That's the equivalent of 35 transactions every second.

But Coles isn't settling for that and continues to target further store network expansion. For example, in FY 2022 the company is aiming to open 20 new supermarkets.

The company is also aiming to reduce costs through its Smarter Selling strategy and focus on automation. This includes the development of almost fully automated distribution centres, which will be operational in the coming years.

Macquarie is positive on the company's future due partly to its investment in its omnichannel. It has an outperform rating and $19.80 price target on its shares.

The broker is also forecasting fully franked dividends per share of 62.2 cents in FY 2022 and 64.8 cents in FY 2023. Based on the current Coles share price of $18.26, this will mean yields of 3.4% and 3.55%, respectively.

Telstra Corporation Ltd (ASX: TLS)

This telco giant could be another ASX dividend share to consider. Telstra has just released its FY 2021 results and posted an 11.6% reduction in total income and a 9.7% decline in underlying EBITDA to $6.7 billion.

Once again, the NBN rollout weighed on its EBITDA result. Telstra recorded an in-year NBN headwind of $650 million for FY 2021. If you exclude this, the company's underlying EBITDA would have fallen only $70 million year on year.

The good news is that the NBN headwind is easing, its costs are reducing, and its mobile business is performing strongly. As a result, management is expecting its underlying EBITDA to grow for the first time in years in FY 2022. It has provided underlying EBITDA growth guidance of 4.5% to 9%. After which, management appears confident that it can deliver a further increase in FY 2023.

Goldman Sachs believes Telstra will deliver on these targets. So much so, the broker believes that a long-awaited dividend increase could be coming in the not so distant future.

It is forecasting fully franked dividends per share of 16 cents through to FY 2023 and then 18 cents in FY 2024. Based on the current Telstra share price of $3.93, this will mean yields of 4.1% through to FY 2023 and then 4.6% in FY 2024.

Goldman has a buy rating and $4.30 price target on its shares.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET and Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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