Bell Potter says BHP and this ASX dividend share are top buys

Income investors might want to check out these shares that the broker is positive on.

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If you're building an income portfolio, then it could pay to listen to what Bell Potter is saying about the ASX dividend shares in this article.

The broker has named them on its Australian equities panel. These are the shares it believes offer attractive risk-adjusted returns over the long term.

Two dividend shares that feature are as follows:

BHP Group Ltd (ASX: BHP)

BHP needs no introduction. The mining giant is one of the most widely held ASX dividend shares out there. But if you haven't yet been bitten by the BHP bug, Bell Potter thinks now could be the time for it to happen.

It likes BHP largely due to its copper exposure, which is a metal that it is particularly bullish on. The broker said:

Copper's structural tailwinds point to a multi-year bull market. Investors should be exposed to this commodity over the next decade

Bell Potter notes that it is one of the biggest players in copper, which is only good news for investors. It adds:

BHP presents an attractive investment proposition, providing exposure to both copper and the potential upside from further Chinese stimulus measures. BHP is one of the top three global producers of copper and has the largest copper endowment of any company globally. BHP operates the Escondida mine in Chile, where they have a 57.5% ownership stake.

The broker is expecting the Big Australian to provide investors with a fully franked dividend yield of approximately 4.5% over the next 12 months.

Smartgroup Corporation Ltd (ASX: SIQ)

Another ASX dividend share that Bell Potter has on its Australian equities panel is Smartgroup.

Unlike BHP, it isn't widely held and thus requires an introduction. Smartgroup describes itself as a simplified employee management services provider. It offers salary packaging, fleet management, and a range of other services to organisations across Australia.

Bell Potter believes the company's shares are attractively priced given its defensive earnings and favourable tailwinds from electric vehicle adoption. It said:

Smartgroup is an industry-leading provider of employee benefits, end-to-end fleet management and software solutions with over 400,000 salary packages and 64,000 novated leases under management. SIQ looks well priced given a fwd P/E of ~14.5x, a defensive client base, earnings tailwinds from the Electric Car Discount Bill (exempts low or zero emission vehicles from Fringe Benefits Tax), an ROE of ~30% and a strong balance sheet.

As for income, the broker is forecasting a fully franked dividend yield of approximately 7% for income investors over the next 12 months.

Motley Fool contributor James Mickleboro 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 positions in and has recommended Smartgroup. 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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