There are a good number of ASX dividend shares to choose from on the Australian share market.
Two that have been given the thumbs up by analysts are listed below. Why are they tipping them as buys? Let's find out:
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Origin Energy Ltd (ASX: ORG)
Analysts at Goldman Sachs think that this energy giant could be a top ASX dividend share to buy this month.
The broker likes Origin due to the diversity of its earnings, its robust free cash flow generation, and its gas supply portfolio and flexible power firming fleet. It explains:
We are Buy rated on ORG considering: APLNG earnings diversification to support strong FCF & returns: We expect electricity markets will remain volatile where ~50% of FY25E EBITDA from APLNG should reduce risk, while supporting a strong 9% FCF yield and 6% dividend yield. Standout gas supply portfolio and flexible power firming fleet: ORG operates the National Electricity Market's (NEM) largest gas generation fleet at 3 GW which will become increasingly important to firm renewable generation, while maintaining a A$10/GJ cost of gas supply which should support margin expansion or market share gain. Growth opportunity through Octopus & Kraken: Octopus' valuation has already increased 600% since ORG's initial investment in 2020, which we expect could continue to grow over 20% in FY25 as contracted Kraken accounts growth drives 30% EBITDA growth.
Goldman is forecasting fully franked dividends per share of 55 cents in FY 2024 and then 67 cents in FY 2025. Based on its current share price of $10.40, this would mean dividend yields of 5.3% and 6.45%, respectively.
The broker has a buy rating and $11.25 price target on its shares.
Rural Funds Group (ASX: RFF)
Bell Potter thinks that Rural Funds would be a great ASX dividend share to buy right now.
Its analysts believe that the agricultural properties company's shares trade at an excessive discount, which has created a "valuable opportunity" for investors. It said:
RFF trades at a historical high discount to its market NAV per unit ($2.78 pu) at ~28%. While we are in general seeing large discounts to NAV in ASX listed farming and water assets to market NAV, the discount that RFF is trading appears excessive and we are seeing a valuable opportunity in RFF. While the timing of that value discount closing is difficult to call, investors are likely to be rewarded with a ~6% yield to hold the position until such a time as the asset class rerates. Furthermore, RFF aims to achieve income growth through productivity improvements, conversion of assets to higher and better use along with rental indexation which is built into all of its contracts with its tenants.
Bell Potter is forecasting dividends per share of 11.7 cents from Rural Funds' shares in FY 2024 and FY 2025. Based on its current share price of $2.05, this equates to dividend yields of 5.7%.
The broker has a buy rating and $2.40 price target on its shares.
