Although the returns on offer with term deposits are the best they have been in years, and could yet improve further if the RBA lifts rates again, they still pale in comparison to what's available from ASX dividend shares.
For example, the shares listed below not only offer better yields but also have the potential to generate meaningful capital returns.
And while the share market is not risk-free, like term deposits are, the risk/reward on offer from these ASX shares could be compelling based on what analysts are saying. Here's what you need to know:
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APA Group (ASX: APA)
APA Group could be a good alternative to a term deposit. Particularly given that it could be classed as a lower risk option. This is because as an energy infrastructure company and owner of a $27 billion portfolio of gas, electricity, solar and wind assets, it has very defensive and predictable earnings.
You only need to look at its dividend history to see this. APA Group will soon increase its dividend for the 20th year in a row. Few ASX shares can match that record.
Macquarie is very positive on the company and has an outperform rating and $9.40 price target on its shares. This implies a potential upside of ~18% for investors over the next 12 months.
The broker also expects some generous dividend yields. It is forecasting dividends of 56 cents per share in FY 2024 and then 57.5 cents per share in FY 2025. Based on the current APA Group share price of $7.99, this equates to 7% and 7.2% yields, respectively.
Accent Group Ltd (ASX: AX1)
While this ASX dividend share is certainly higher up the risk scale than APA Group, its forecast dividend yields and major upside potential arguably make it worth considering.
Thanks to "continuing casual footwear trends and as sports, fitness & wellness related spending remains a priority," Bell Potter is bullish on the footwear retailer and sees a lot of value in its shares.
The broker currently has a buy rating and $2.50 price target on them. Based on the current Accent share price of $1.94, this implies potential upside of almost 30% for investors over the next 12 months.
As for income, the broker is forecasting fully franked dividends per share of 13 cents in FY 2024 and then 14.6 cents in FY 2025. This represents dividend yields of 6.7% and 7.5%, respectively.
