Why analysts rate these ASX dividend shares as buys

Income investors are spoilt for choice when it comes to ASX dividend shares. So much so, it can be hard to decide which ones to buy above others.

But don’t worry, because analysts have been busy doing the hard work for you and have picked out the ones they think are buys.

Two that have been named as buys are listed below. Here’s why they are bullish on them:

SRG Global Ltd (ASX: SRG)

Analysts at Bell Potter think that SRG Global could be a great ASX dividend share to buy.

It is a diversified industrial services group that provides multidisciplinary construction, maintenance, production drilling and geotechnical services.

Bell Potter is positive on the company due to its belief that it will be a beneficiary of accelerating growth in iron ore and gold production volumes over the next five years. It explains:

SRG’s short-to-medium term outlook is reinforced by Government-stimulated construction activity in the Infrastructure and Non-Residential sectors and increased development and sustaining capital expenditures in the Resources industry. The resulting expansion in infrastructure bases across these sectors will likely support increased demand for asset care and maintenance in the medium to long-term. We anticipate Mining Services will be a beneficiary of accelerating growth in iron ore and gold production volumes over the next five years.

In respect to dividends, the broker is forecasting fully franked dividends of 4.7 cents in FY 2024 and then 6.7 cents in FY 2025. Based on its current share price of 88.5 cents, this will mean dividend yields of 5.3% and 7.6%, respectively.

Bell Potter has a buy rating and $1.30 price target on its shares.

Telstra Group Ltd (ASX: TLS)

Analysts at Goldman Sachs think that Telstra could be an ASX dividend share to buy.

It rates the telco giant highly due to the strength of its mobile business. This was reinforced this month when Telstra announced price increases for its mobile plans. It expects this to underpin solid earnings and dividend growth in the coming years. In addition, the broker sees scope to unlock value from asset sales. It said:

We believe the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive. We also believe that Telstra has a meaningful medium term opportunity to crystallise value through commencing the process to monetize its InfraCo Fixed assets – which we estimate could be worth between A$22-33bn. Although there is some debate around the strategic benefits, we see a strong rationale for monetizing the recurring NBN payment stream, given its inflation-linked, long duration cash flows could be worth $14.5bn to $17.9bn, with no loss of strategic benefit.

As for income, Goldman is forecasting fully franked dividends of 18 cents per share in FY 2024 and then 19 cents per share in FY 2025. Based on the current Telstra share price of $3.84, this equates to yields of 4.7% and 5%, respectively.

Goldman has a buy rating and $4.30 price target on its shares.

The post Why analysts rate these ASX dividend shares as buys appeared first on The Motley Fool Australia.

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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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Srg Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.