Buy these cheap ASX dividend shares: Goldman Sachs

Goldman Sachs thinks these cheap dividend shares could be buys…

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If you're looking for some cheap dividend shares, then you may want to check out the two shares listed below that Goldman Sachs rates as buys.

Here's why the broker thinks income investors should be buying their shares:

Adairs Ltd (ASX: ADH)

Goldman Sachs believes this leading furniture and homewares retailer is a dividend share to buy right now. 

This is based on its belief that the company's core business is more resilient than the market realises. In light of this, the broker feels that its shares have been oversold and are trading at an unjustified discount to other retail shares.

And while this share price weakness has been disappointing, it has made the potential dividend yields on offer significantly more attractive.

For example, Goldman Sachs is forecasting fully franked dividends per share of 17 cents in FY 2023 and 20 cents in FY 2024. Based on the latest Adairs share price of $2.40, this will mean yields of 7.1% and 8.3%, respectively.

Goldman currently has a buy rating and $2.65 price target on its shares.

Universal Store Holdings Ltd (ASX: UNI)

Another ASX dividend share that Goldman Sachs rates highly is Universal Store. It is a retailer with a focus on the youth apparel industry through its Universal Store and Thrills brands.

As with Adairs, Universal Store's shares haven fallen heavily this year. This has been driven by concerns over consumer spending amid the cost of living crisis.

However, Goldman believes this has been a mistake. Its analysts expects Universal Store's target demographic will be less impacted by rising interest rates, particularly given that they stand to benefit from an increase in the minimum wage.

Goldman is expecting this to underpin fully franked dividends of 26.1 cents in FY 2023 and 29.9 cents in FY 2024. Based on the latest Universal Store share price of $5.16, this equates to yields of 5% and 5.8%, respectively.

Goldman has a buy rating and $7.30 price target on its shares.

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 positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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