2 excellent ASX dividend shares analysts rate as buys

These dividend shares are rated highly by analysts…

| More on:
blockletters spelling dividends bank yield

Image Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With interest rates likely to remain low for some time to come, the yields on the ASX dividend shares listed below could be even more attractive than normal for income investors.

Here's what you need to know about these dividend shares that a leading broker has rated as buys:

Adairs Ltd (ASX: ADH)

The first ASX dividend share to look at is Adairs. It is a leading retailer of homewares and home furnishings in Australia and New Zealand through both retail stores and online channels.

It has been in fine form in FY 2021 thanks to heightened sales during the pandemic. This led to the company recently reporting a 28.5% increase in sales to $499.8 million. And thanks to margin expansion, Adairs' underlying earnings before interest and tax (EBIT) almost doubled to $109.1 million. This allowed Adairs to increase its dividend to 23 cents per share.

And while it will be very hard for Adairs to outperform this in FY 2022, it has started the year strongly.

The team at Morgans are positive on the company. Last week the broker upgraded its shares to an add rating with a $4.20 price target. Morgans is also forecasting fully franked dividends per share of 22 cents in FY 2022 and 27 cents in FY 2023.

Based on the current Adairs share price of $3.73, this will mean yields of 5.9% and 7.2%, respectively.

Coles Group Ltd (ASX: COL)

This supermarket giant could be a dividend share to consider buying. Coles has just handed in a solid full year result for FY 2021.

For the 12 months ended 30 June, the company reported sales revenue growth of 3.1% to $38,562 million and net profit after tax growth of 7.5% to $1,005 million. The latter was a touch ahead of the market's expectations. This allowed Coles to increase its full year dividend by 6% to a fully franked 61 cents per share.

Morgans is also feel bullish about Coles. In response to its full year results, the broker retained its add rating and lifted its price target to $19.80. It is now forecasting dividends of 61 cents per share in FY 2022 and then 62 cents per share in FY 2023.

Based on the current Coles share price of $17.89, this represents yields of 3.4% and 3.5%, respectively.

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 recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO and COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Dividend Investing

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Dividend Investing

Big dividends: A 7% ASX ETF to buy for income this week

This ETF is a great choice when you can't find anything else...

Read more »

A woman sits at a table with notebook on lap and pen in hand as she gazes off to the side with the pen resting on the side of her face as though she is thinking and contemplating while a glass of orange juice and a pair of red sunglasses rests on the table beside her.
Dividend Investing

The smartest ASX dividend shares to buy with $3,000 right now

These businesses offer a pleasing dividend yield and great value.

Read more »

Happy woman working on a laptop.
Dividend Investing

The smartest ASX dividend stocks to buy with $1,000 right now

High yields are hard to find these days.

Read more »

Different Australian notes.
ETFs

Own the Vanguard US Total Market Shares Index ETF? Here's your next dividend

Vanguard announced the final distribution amount for VTS ETF investors today.

Read more »

ETF written on cubes sitting on piles of coins.
ETFs

Own SPDR ASX ETFs? Here is your next dividend and when you'll receive it

State Street Global Advisors announced distribution payment amounts and dates today.

Read more »

A woman wearing yellow smiles and drinks coffee while on laptop.
Dividend Investing

Forget CBA shares and buy these ASX dividend stocks

Analysts think these shares are better buys that CBA right now.

Read more »

A man in his office leans back in his chair with his hands behind his head looking out his window at the city, sitting back and relaxed, confident in his ASX share investments for the long term.
Dividend Investing

3 ASX dividend shares to buy to beat falling interest rates

Analysts think these buy-rated shares could generate great yields.

Read more »

An oil refinery worker stands in front of an oil rig with his arms crossed and a smile on his face as the Woodside share price climbs today
ETFs

This ASX ETF has a 4% dividend yield. Should you buy for income?

There aren't too many ETFs offering more than 4% right now...

Read more »