This week, Westpac predicted the Reserve Bank will roll out no less than seven interest rate cuts throughout 2024 and 2025. If these eventuate, they will certainly bring some welcome relief for Aussie homeowners, who have been grappling with the rising cost of living and surging mortgage repayments since May 2022.

But we still have 2023 to get through. And unfortunately, on that front, the news is slightly less rosy.

Westpac is tipping two more rises this year and expects the cash rate to peak at 4.1% in June. Australia’s oldest bank says that’s where rates will stay for the remainder of the year, with the first cut not expected until March next year. 

One way to help ease the sting of inflation is with some additional income. But if you’re already working as hard as you can, and don’t have time for a side hustle, what then?

ASX dividend shares could be the answer. 

So, we asked our Foolish writers which ASX dividend stocks they think are worth buying in March for a passive income boost. Here is what they said:      

7 best ASX dividend shares for March 2023 (smallest to largest)

• Bailador Technology Investments Ltd (ASX: BTI), $177.68 million
• Super Retail Group Ltd (ASX: SUL), $2.93 billion
• Charter Hall Long WALE REIT (ASX: CLW), $3.29 billion
• Pilbara Minerals Ltd (ASX: PLS), $12.62 billion
• Coles Group Ltd (ASX: COL), $24.08 billion
• Woolworths Group Ltd (ASX: WOW), $44.73 billion
• Westpac Banking Corp (ASX: WBC) $77.45 billion

(Market capitalisation as of 2 March 2023)

Why our Foolish writers love these ASX passive-income stocks

Bailador Technology Investments Ltd

What it does: Bailador is a growth capital fund focused on the IT sector. It looks to invest between $5 million and $20 million into tech companies seeking growth-stage investment.

Bailador prefers relatively young businesses with proven business models and “attractive unit economics”. It also likes founder-led companies with international revenue generation, a significant market opportunity, and the ability to generate repeat revenue.

By Tristan Harrison: I like the investment style of Bailador, which has enabled its portfolio to perform well over the last three years, delivering an average annual return of 13.9%.

The company’s dividend policy is to pay a fully-franked dividend yield of 4% per annum of pre-tax net tangible assets (NTA), paid semi-annually.

Its pre-tax NTA was $1.79 at 31 January 2023. But, because the latest Bailador share price at the time of writing was $1.22 – a 32% discount to the latest stated NTA – the yield on the actual share price is around 5.9%, or 8.4% grossed-up for franking credits.

Motley Fool contributor Tristan Harrison owns shares in Bailador Technology Investments Ltd.

Super Retail Group Ltd

What it does: You might know this company by its unmistakable red, yellow, and white automotive brand, Supercheap Auto. However, Super Retail Group is much bigger than its revving roots.

Today, it houses some of the strongest brands in Australian retail, including Rebel, BCF, and Macpac, in addition to Supercheap Auto.

By Mitchell Lawler: The latest half-year results from Super Retail Group were remarkably good, demonstrating the resiliency and diversity that Anthony Heraghty (CEO) and the team have built in the group.

Normalised earnings increased 36% on the prior corresponding year, adding to a commendable history of growth. Yet, the company trades at a price-to-earnings (P/E) ratio of around 11 times. While this is roughly in line with the industry average, I believe it underappreciates the quality of the four individual brands.

In my opinion, the sum of the parts should skew the P/E ratio more toward 15 – placing the valuation closer to $4.1 billion than its current $2.9 billion.

Super Retail shares are currently offering a dividend yield of 5.3%. Remember, the stock’s ex-dividend date is just around the corner, 8 March.

Motley Fool contributor Mitchell Lawler does not own shares in Super Retail Group Ltd.

Charter Hall Long WALE REIT

What it does: Charter Hall Long WALE REIT is just that – a real estate investment trust (REIT) focused on properties with long-weighted average lease expiries (WALE). As of the end of the first half, the REIT boasted 99.9% occupancy and an average WALE of nearly 12 years.

By Brooke Cooper: The Charter Hall Long WALE REIT share price has struggled lately, falling nearly 12% over the last 12 months, alongside the S&P/ASX 200 Index (ASX: XJO) real estate sector.

But soaring inflation and rising interest rates weighing on the sector don’t pose such a threat to this REIT.

Its tenants undergo annual rent increases, with half linked to CPI and the other half fixed at average increases of 3.1%.

And it’s also tipped to grow its dividends. Citi forecasts the REIT to pay 28 cents per share this financial year. At that rate, Charter Hall Long WALE could boast a 6.2% dividend yield at its current share price.

Motley Fool contributor Brooke Cooper does not own units in the Charter Hall Long WALE REIT.

Pilbara Minerals Ltd

What it does: Pilbara Minerals’ primary focus is its 100%-owned Pilgangoora Lithium-Tantalum Project, located in Western Australia. The project is the world’s largest independent hard-rock lithium operation.

By Bernd Struben: Pilbara Minerals is capitalising on the massive growth in electric vehicles (EVs) and grid storage batteries, which is likely to see global lithium demand continue to increase.

Last week, the company reported a 989% year-on-year increase in half-year net profit after tax (NPAT). Management also declared Pilbara’s inaugural dividend of 11 cents per share (cps), fully franked.

CEO Dale Henderson called it “a huge milestone”. He said with “massive growth steps in the months and years ahead, this is just the beginning”.

Indeed, analysts at Goldman Sachs forecast Pilbara will pay a final dividend of around 20 cps, bringing the full-year payout to 31 cps. That equates to a 7.7% yield at the current share price.

Pilbara Minerals shares have gained 45% in 12 months.

Motley Fool contributor Bernd Struben does not own shares in Pilbara Minerals Ltd.

Coles Group Ltd

What it does: Coles Group is an ASX dividend share that needs little introduction. It is Australia’s second-largest grocer and also has a significant presence in the takeaway alcohol market.

By Sebastian Bowen: This ASX 200 dividend heavyweight’s income chops seem to go from strength to strength. Just last month, Coles delivered its latest earnings report.

Aside from announcing healthy rises in revenue and profits, Coles also increased its interim dividend yet again by 9.1% to 36 cents per share, fully franked.

This continues the pleasing pattern we have seen from this blue-chip share, which has ratcheted up its dividend every six months since floating on the ASX in its own right.

With inflation and interest rates still on the boil, I think Coles is a great place to look for dividend income this March.

Motley Fool contributor Sebastian Bowen does not own shares in Coles Group Ltd.

Woolworths Group Ltd

What it does: Woolworths is Australia’s biggest supermarket retailer and also owns Big W.

By Bronwyn Allen: I like the defensive nature of this ASX dividend share. Woolworths is a mature, long-established business that will, arguably, continue to pay dividends no matter what the economy is doing.

In fact, in tough economic times, it may just pay you more. Case in point: This year’s Woolworths interim dividend of 46 cents per share fully franked is almost 20% higher than last year’s, thanks to strong 1H FY23 earnings.

In a clear demonstration that ASX consumer staples companies can tolerate inflationary impacts better than most, Woolworths raised its food prices by 7.7% in Q2 FY23, which is almost exactly in line with Australia’s annual inflation rate of 7.8%.

The supermarket giant booked a 14% increase in net profit after tax (NPAT) to $907 million over 1H FY23, with the value of sales up 4%.

Motley Fool contributor Bronwyn Allen does not own shares in Woolworths Group Ltd.

Westpac Banking Corp

What it does: Westpac is one of Australia’s largest banks. It operates under several brands, including St George, Bank of Melbourne, Bank SA, and of course, Westpac.

By James Mickleboro: If you don’t already have exposure to the banking sector, then I think Australia’s oldest bank could be a great option for income investors in March. That’s because I believe it has the strongest earnings outlook relative to the rest of the big four.

This is due to the combination of rising interest rates and the bank’s bold cost-reduction plans. The latter sees Westpac aiming to reduce its cost base to $8.6 billion by FY 2024, compared to $13.3 billion in FY 2021.

Goldman Sachs is expecting Westpac to pay fully-franked dividends of $1.47 per share in FY 2023 and then $1.56 per share in FY 2024. Based on the Westpac share price of $21.64 as at Thursday’s close, this will mean generous yields of 6.8% and 7.2%, respectively.

Motley Fool contributor James Mickleboro owns shares in Westpac Banking Corp.

The post Top ASX dividend shares to buy in March 2023 appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why Brainchip, Coles, Karoon Energy, and Pilbara Minerals shares are tumbling
• Someone in China has just sold $600 million of Pilbara Minerals shares. Here’s what we know
• Why is the Woolworths share price sliding lower today?
• Why is the Pilbara Minerals share price falling in a hole Thursday morning?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments and Super Retail Group. The Motley Fool Australia has positions in and has recommended Coles Group and Super Retail Group. The Motley Fool Australia has recommended Bailador Technology Investments and Westpac Banking. 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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