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:
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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.
