While the rates on term deposits are now somewhat reasonable after a series of rate hikes by the Reserve Bank over the last couple of years, it seems quite likely that we have reached a peak and they could be heading lower again in the near term.
This could possibly be as soon as next week, with the Reserve Bank of Australia tipped to cut the cash rate.
In light of this, income investors may be better off looking at the ASX dividend shares in this article instead of term deposits. Here's why analysts think these shares are in the buy zone now:
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Endeavour Group Ltd (ASX: EDV)
Goldman Sachs likes Endeavour Group and sees it as an ASX dividend share to buy.
It is the leader in the Australian alcohol retail market. This is through its popular store brands Dan Murphy's and BWS, as well as the ALH Hotels business. It has over 350 licensed venues across the country.
The broker thinks Endeavour would be a top option due to its market leadership position in a defensive market. It is expecting this to underpin fully franked dividends of 19 cents per share in FY 2025 and then 22 cents per share in FY 2026. Based on the current Endeavour share price of $4.42, this will mean dividend yields of 4.3% and 5%, respectively.
Goldman has a buy rating and $5.10 price target on its shares.
IPH Ltd (ASX: IPH)
Another ASX dividend share that Goldman Sachs is positive on is IPH. It is a leading intellectual property (IP) services company behind businesses including AJ Park, Griffith Hack, Pizzeys, ROBIC, Smart & Biggar, and Spruson & Ferguson.
The broker likes IPH due to its belief that it is "well-placed to deliver consistent and defensive earnings with modest overall organic growth." In addition, it highlights that it is "trading on a material NTM P/E discount to its historical average multiple, and with defensive earnings, strong cash flow and M&A optionality."
As for income, Goldman is forecasting fully franked dividends of 36 cents per share in FY 2025 and then 39 cents per share in FY 2026. Based on the current IPH share price of $4.82, this will mean dividend yields of 7.5% and 8.1%, respectively.
The broker currently has a buy rating and $7.50 price target on its shares.
Regal Partners Ltd (ASX: RPL)
Finally, Bell Potter sees Regal Partners as an ASX dividend share to buy. It is an alternative investment management company.
The broker likes Regal Partners due to its attractive valuation and robust investment performance.
It believes this will support fully franked dividends of 14.6 cents per share in FY 2024 and 18.1 cents in FY 2025. At the current share price of $3.91, this equates to dividend yields of 3.7% and 4.6%, respectively.
Bell Potter has a buy rating and $4.85 price target on its shares.
