2 ASX dividend shares brokers are backing right now

These 2 dividend players are firmly on analyst radars this year.

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Looking for ASX dividend shares to add to your ASX portfolio? Brokers are currently backing Telstra Group Ltd (ASX: TLS) and Eagers Automotive Ltd (ASX: APE) as top contenders.

Both companies offer reasonable dividend yields, and brokers are positive on their growth prospects, making them candidates for long-term investors.

Let's take a closer look at why the experts rate these 2 ASX dividend shares.

ASX dividend shares for the future

Telstra continues to capture the attention of brokers as a reliable ASX dividend share.

The telecommunications giant reported decent earnings growth in FY24, supported by its mobile business and improving margins in the NBN segment.

At its current share price of $3.88 apiece, Telstra's trailing dividend yield is 4.6%. Brokers believe Telstra's dividends will continue to grow steadily moving forward.

Created with Highcharts 11.4.3Telstra Group PriceZoom1M3M6MYTD1Y5Y10YALL1 Sep 20235 Sep 2024Zoom ▾Sep '23Nov '23Jan '24Mar '24May '24Jul '24Sep '24Oct '23Oct '23Jan '24Jan '24Apr '24Apr '24Jul '24Jul '24www.fool.com.au

Goldman Sachs retained its buy rating on Telstra in a recent note, with an improved price target of $4.35 per share. It is bullish on the telco's resilient earnings, saying:

Telstra is the incumbent telecom operator in Australia. We believe the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive.

Although at a headline level, Telstra valuation appears relatively full…we note: (1) Adjusting out NBN recurring payments (a unique asset), Telstra trades at a much more compelling multiple; (2) Although its yield spread is compressed vs. history, when factoring dividend growth this is more attractive.

Goldman expects fully franked dividends of 19 cents per share in FY25, rising to 20 cents per share in FY26.

This translates to dividend yields of 4.9% and 5.1% based on today's share price.

With projected earnings and dividend growth, Telstra is poised to keep its place on the mantlepiece as a top ASX dividend share.

Eagers Automotive in favour

Eagers Automotive is another ASX dividend share that brokers are backing. It is one of Australia's leading automotive retail groups, operating for over a century.

The stock has had a difficult last 12 months, down 32%. But brokers are bullish on its outlook.

On the valuation front, Morgans rates Eagers a buy with a $14 price target, indicating a 33% upside potential.

It is joined by Ord Minnett, with a buy rating and $12.80 apiece valuation.

Created with Highcharts 11.4.3Eagers Automotive Ltd PriceZoom1M3M6MYTD1Y5Y10YALL1 Sep 20235 Sep 2024Zoom ▾Sep '23Nov '23Jan '24Mar '24May '24Jul '24Sep '24Oct '23Oct '23Jan '24Jan '24Apr '24Apr '24Jul '24Jul '24www.fool.com.au

Meanwhile, Bell Potter also has a buy rating on Eagers with a price target of $13 per share. The broker believes Eagers has more room to run and forecasts fully franked dividends of 74 cents per share in FY25.

This gives investors a dividend yield of 7% at the current share price.

Consequently, Eagers is one of the higher-yielding ASX dividend shares, a feature that income investors may find appealing.

Compared to most high-interest savings accounts, this one takes the cake, especially with the prospects of additional capital gains, if those bullish brokers are correct.

Foolish takeaway

Telstra and Eagers Automotive stand out as two ASX dividend shares that brokers believe offer solid returns.

Motley Fool contributor Zach Bristow 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 Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Eagers Automotive Ltd. 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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