'Attractive numbers': Expert names ASX dividend share to buy right now

This consumer goods stock is looking cheap and is likely to hand out a nice dividend yield. What more could you want?

| More on:
Happy woman looking for groceries. as she watches the Coles share price and Woolworths share price on her phone

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

One ASX company that was a huge "COVID beneficiary" is holding onto those customers as Australia moves past the pandemic.

That's the opinion of Shaw and Partners portfolio manager James Gerrish, who revealed that consumer goods conglomerate Metcash Limited (ASX: MTS) is sitting comfortably in his income portfolio.

"Metcash definitely dominates in the rural market place but it also performed strongly in the major cities during COVID as people shifted from large supermarkets to the more convenient community supermarkets of IGA," he said in a Market Matters Q&A.

But the post-pandemic slowdown is much slower and shallower than expected.

"This transition is slowly being reversed as COVID takes a backseat to almost all news stories," said Gerrish.

"However, the original transition to Metcash has been pretty resilient despite the economic reopening over the last 24 months, highlighting the stickiness of the consumer."

Cheap with big dividend payouts

This stickiness is reflected in the Metcash share price, with it remaining almost flat over the past 6 months, even as recession fears buffet other consumer goods stocks.

This is all while paying out a chunky 5.7% dividend yield.

Both the stock price and income are genuine lures for investors, according to Gerrish.

"Current expectations have the stock trading on a 12.1x FY23 valuation while it [is] estimated to pay a dividend yield of around 6.7% fully franked over the next 12-months," he said.

"These attractive numbers are why it resides in our Market Matters Income Portfolio."

The Motley Fool's Tristan Harrison is also a fan of Metcash shares as a cheaper alternative to its giant supermarket rivals.

"Metcash can benefit from ongoing store rollouts, improvements in its logistics and online offerings, and scale advantages," he said earlier this month.

"I think that Metcash's earnings — like food and liquor — can be resilient even in a downturn, so I think it could be a smart pick at today's price."

The broader professional investment community is somewhat divided on Metcash shares.

According to CMC Markets, three out of six analysts currently rate the stock as a buy.

Motley Fool contributor Tony Yoo 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 has recommended Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Two excited woman pointing out a bargain opportunity on a laptop.
Dividend Investing

2 great ASX income shares I'd buy right now for the long term

I’m excited by the potential of these dividend stocks.

Read more »

A man in his late 60s, retirement age, emerges from the Australian surf carrying a surfboard under his arm and wearing a wetsuit.
Opinions

Here's how much ASX dividend income I'm aiming for in retirement

I’m using passive income stocks as a path to financial independence.

Read more »

A group of businesspeople clapping.
Dividend Investing

The perfect ASX dividend shares to buy and hold forever

Brokers think that these shares could be great long-term options for income investors.

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
Dividend Investing

This 6% ASX dividend stock pays cash every quarter

Bell Potter says that this income option is a great option for investors.

Read more »

A young smiling couple out hiking enjoy a view from the top of the mountains.
Dividend Investing

2 high-yield ASX dividend stocks I think could be great buys in 2025

These two stocks could be undervalued and deliver good dividends.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Dividend Investing

Passive-income champion: One ASX stock yielding more than 4%

Brokers like the dividend potential from this stock.

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Dividend Investing

Why are Macquarie shares slumping today?

This investment bank's shares are out of form today. But why?

Read more »

Happy couple enjoying ice cream in retirement.
Share Market News

3 ASX dividend shares to buy in November for passive income

Analysts say these shares are buys for income investors.

Read more »