Although the Reserve Bank of Australia is unlikely to cut interest rates this week, it may not be long until the central bank acts again.
In light of this, the interest rates on offer with term deposits and savings accounts could be heading lower over the next 12 months, putting pressure on income investors.
But don't worry, because there are plenty of ASX dividend shares out there to save the day. Here are two that analysts are tipping as buys:
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Dexus Convenience Retail REIT (ASX: DXC)
The first ASX dividend share to look at is Dexus Convenience Retail REIT.
It is a real estate investment trust (REIT) that owns a high-quality portfolio of Australian service stations and convenience retail assets. These are primarily located along the country's eastern seaboard.
Bell Potter is tipping its shares as a buy. The broker highlights that the company's shares are unfairly trading at a deep discount to their net tangible assets (NTA). Commenting on the Dexus Convenience Retail REIT, the broker said:
DXC remains one of our preferred ways to play externally managed REITs given its high distribution yield (c.7.1%), price discovery via asset sales (with >10% of the book recycled last 18m), yet trading at a -20% discount to NTA, despite NTA starting to regrow.
With EV growth moderating last 6mths, combined with operator reinvestment into the sector (BP for ConvenienceX, Viva for OTR, i7 Holdings for 7/Eleven) and stabilising funding costs, we see a platform to grow from whilst being 'paid to wait' at attractive risk-adjusted pricing.
And while it certainly isn't risk free like a term deposits, the dividend yields on offer arguably make up for this. Bell Potter is forecasting dividends per share of 20.6 cents in FY 2025 and then 21 cents in FY 2025. Based on its current share price of $2.85, this equates to dividend yields of 7.2% and 7.4%, respectively.
Bell Potter currently has a buy rating and $3.30 price target on its shares.
IPH Ltd (ASX: IPH)
Another ASX dividend share that could be a top alternative to term deposits in the current environment is IPH.
It is a leading intellectual property (IP) services company operating across the globe under a number of names. This includes AJ Park, Griffith Hack, Pizzeys, ROBIC, Smart & Biggar, and Spruson & Ferguson. It also owns the Applied Marks business, which is an online automated trade mark application platform.
Morgans thinks that its shares are cheap at current levels and could re-rate to higher multiples when organic growth resumes. It said:
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.
For now, the broker is forecasting fully franked dividends of 35 cents per share in FY 2025 and then 36 cents per share in FY 2026. Based on the current IPH share price of $4.55, this will mean dividend yields of 7.7% and 7.9%, respectively.
Morgans currently has an add rating and $6.30 price target on its shares.
