Commonwealth Bank of Australia (ASX: CBA) shares have delivered the goods for investors over the past 12 months.
During this time, the banking giant's shares have more than doubled the market return with a gain of 34%.
Unfortunately, though, the broker community believes that this makes CBA's shares overvalued now. And by some margin. As a result, if you are looking for ASX dividend shares to buy, they feel that CBA is not one of them.
But which shares could be good alternatives for income investors? Let's take a look at a couple that brokers rate as buys. They are listed below:
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Telstra Group Ltd (ASX: TLS)
Goldman Sachs thinks that Telstra could be an ASX dividend share to buy.
The broker was pleased with the telco giant's performance in FY 2024 and expects more of the same in the coming years. This is expected to be underpinned by Telstra's mobile business. It said:
We believe the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive. We also believe that Telstra has a meaningful medium term opportunity to crystallise value through commencing the process to monetize its InfraCo Fixed assets – which we estimate could be worth between A$22-33bn.
Goldman expects fully franked dividends of 19 cents per share in FY 2025 and then 20 cents per share in FY 2026. Based on the current Telstra share price of $3.92, this represents dividend yields of 4.85% and 5.1%, respectively.
The broker has a buy rating and $4.35 price target on the company's shares.
Transurban Group (ASX: TCL)
The team at Bell Potter thinks that Transurban could be an ASX dividend share to buy.
It is one of the world's leading toll road operators with a high-quality portfolio of assets across Australia and North America. It also has a significant growth pipeline, which Bell Potter believes will drive long term growth. It said:
We believe the current inflationary environment is favourable for Transurban given its inflation-linked revenue stream with annual escalators. Moreover, TCL provides low risk cash flows over the long term, with long concession duration (30+ years), and relative traffic/income resilience. The group's current pipeline of growth projects is $3.3 billion (TCL's share of total project cost) and further huge development opportunities are expected over the next few decades, supported by population and economic growth.
Bell Potter believes Transurban will pay dividends per share of 65 cents in FY 2025 and 72 cents in FY 2026. Based on its current share price of $13.11, this will mean yields of 4.95% and 5.5%, respectively.
The broker has a buy rating and $14.20 price target on Transurban's shares.
