Leading broker says these ASX dividend shares are buys

Let's see why analysts at Morgans think these shares would be top picks for income investors.

| More on:
A woman relaxes on a yellow couch with a book and cuppa, and looks pensively away as she contemplates the joy of earning passive income.

Image source: The Motley Fool

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A new month is here, so what better time to look at making some new additions to your income portfolio.

Two ASX dividend shares that are highly rated by analysts at Morgans are listed below. Here's what the broker is saying about them:

Adairs Ltd (ASX: ADH)

The first ASX dividend share to be given a thumbs up by brokers is Adairs. It is a leading omni-channel furniture and homewares retailer.

Last week, Morgans put an add rating and $2.85 price target on its shares.

The broker is feeling upbeat about its outlook, particularly given its new distribution centre. It said:

Adairs' 1H25 result was broadly in line with our expectations, with underlying EBIT (pre-AASB 16) up 10% to $33.0m. This was driven by strong sales in Adairs and Mocka Australia, offset by weakness in Focus and Mocka NZ. Margins were well managed driven by cost efficiencies from the National Distribution Centre (NDC) and implementation of the new warehouse management system.

The positive trading momentum in Adairs has continued into the second half with sales up an impressive 15.2%; we expect this to moderate for the balance of the half. Ongoing efficiencies in the NDC will help offset inflationary cost pressures and margin headwinds. We forecast EBIT for Adairs brand just shy of 10%. We have revised our EBIT down 3% and 4% respectively, but have increased our price target 10c to $2.85 based on higher peer multiples. We retain our ADD rating.

In respect to income, Morgans is forecasting fully franked dividends of 14 cents per share in FY 2025 and then 17 cents per share in FY 2026. Based on its current share price of $2.28, this equates to dividend yields of 6.1% and 7.4%, respectively.

IPH Ltd (ASX: IPH)

Morgans thinks that this intellectual property (IP) services provider could be an ASX dividend share to buy.

In response to its half year results, the broker put an add rating and $6.30 price target on its shares.

Its analysts believe that the company's valuation is undemanding and feel that a re-rating could be on the cards soon. It said:

On a like-for-like basis, IPH reported 1H25 revenue +4% and EBITDA -3% on pcp. ANZ delivered incremental growth (+2% LFL); and Asia marginally down (-1%). Canada results were mixed, although impacted by some temporary issues. LFL EBITDA was down 2% on pcp; and reported EBITDA down ~11% HOH. Whilst organic growth is still challenged, the outlook for each division looks to have either stabilised or incrementally improved.

A positive turn in Asian filings; incremental acquisition contribution; and currency support growth in 2H25. IPH's valuation is undemanding (~10.8x FY25F PE), however investor patience is required given the delivery of organic growth looks to be the catalyst for a re-rating.

Morgans is forecasting partially franked dividends of 35 cents per share in FY 2025 and then 36 cents per share in FY 2026. Based on its current share price of $4.79, this equates to dividend yields of 7.25% and 7.5%, respectively.

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 Adairs. The Motley Fool Australia has recommended IPH Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Close up of woman using calculator and laptop for calculating dividends.
Dividend Investing

Forget term deposits! I'd buy these two ASX 200 shares instead

I’d rather buy these stocks for income than hold a term deposit right now.

Read more »

A man in a suit smiles at the yellow piggy bank he holds in his hand.
Dividend Investing

Forget CBA shares and buy these ASX dividend shares

Analysts are bearish on CBA but bullish on these shares.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

Own IVV ETF or other iShares ASX ETFs? Next dividends and DRP prices revealed…

BlackRock has announced the next lot of dividends for its iShares ETFs, as well as the DRP prices.

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
Dividend Investing

How are these passive income investors earning a 7.5% dividend yield on their surging CBA shares?

CBA shares are proving more lucrative for some passive income investors than others.

Read more »

A couple cheers as they sit on their lounge looking at their laptop and reading about the rising Redbubble share price
Dividend Investing

3 excellent ASX dividend shares to buy with $2,500

Brokers think these shares could be in the buy zone for income investors.

Read more »

A woman sits in a quiet home nook with her laptop computer and a notepad and pen on the table next to her as she smiles at information on the screen.
Opinions

2 top ASX passive income stocks to buy with $5,000 today

I think these leading ASX passive income shares will keep delivering market beating yields in FY 2026.

Read more »

A person is weighed down by a huge stack of coins, they have received a big dividend payout.
ETFs

Own the VanEck Wide Moat ETF (MOAT)? Get ready for a monster dividend

Investors are in line for a single dividend worth nearly 6%.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Dividend Investing

2 dirt cheap ASX dividend stocks to buy in July

Here are a couple of cheap stocks that analysts think would be top picks for income investors.

Read more »