Broker says these ASX dividend shares are buys

Are you looking for new additions to your income portfolio? If you are, then take a look at the two ASX dividend shares that Morgans rates as buys.

Here’s what the broker is recommending to clients:

Eagers Automotive Ltd (ASX: APE)

Morgans notes that automotive retailer Eagers Automotive delivered a result that was in line with expectations in FY 2025.

So, with this ASX dividend share trading at 20x earnings, the broker thinks that now is a good time to buy. This is especially the case given its positive earnings growth outlook. Morgans has put a buy rating and $31.80 price target on its shares. It said:

FY25 revenue of A$13.05bn (+16.5% pcp) was in line with expectations, as record cost discipline (12.1% opex/sales) helped drive a strong ROS outcome of 3.3%. APE is poised for a fourth consecutive year of material ANZ revenue growth (MorgansF A$0.9bn) and CanadaOne is tracking positively (PBT +12.2% LTM Dec-25 vs Jun-25) with completion expected imminently. EA123 remains a key medium-term driver, with profitability improving (ROS 4.4% vs 3.6% pcp) and clear intent to scale the network and the broader ecosystem. Industry margins appear to have passed the trough, and APE continues to drive outperformance through operational excellence.

We view ~20x PE as an attractive entry point for strong near-term earnings growth (~20% EPS FY26-27F); growing earnings visibility; expected upside through M&A; and various strategic initiatives to support the medium term. Move to BUY (from ACCUMULATE). A$31.80ps PT.

Morgans expects fully franked dividends of 88 cents per share in FY 2026 and then 97 cents per share in FY 2027. Based on its current share price of $25.57, this would mean dividend yields of 3.4% and 3.8%, respectively.

Universal Store Holdings Ltd (ASX: UNI)

Another ASX dividend share that gets the thumbs up from Morgans is youth fashion retailer Universal Store.

In response to its half-year results, the broker has retained its buy rating with a slightly improved price target of $10.60. It said:

UNI reported a strong 1H26 result which was ahead of expectations. Sales were up 14.2% to $209.6m and EBIT grew by 23.2% to $43.6m, EBIT margin up 150bps. The strong sales momentum has continued into the first 7 weeks of the 2H, despite the challenging comps (+20%). UNI has consistently delivered through a challenging retail environment, +7.9% LFL sales CAGR over the last 6 years. We have a $10.60 target price (was $10.50). BUY maintained.

Morgans expects fully franked dividends of 41 cents per share in FY 2026 and then 46 cents per share in FY 2027. Based on its current share price of $8.92, this equates to dividend yields of 4.6% and 5.15%, respectively.

The post Broker says these ASX dividend shares are buys appeared first on The Motley Fool Australia.

More reading

• Why Hub24, Sonic, Telstra, and Universal Store shares are racing higher today
• Universal Store trading higher as profits beat expectations
• Eagers Automotive posts record FY25 earnings
• Broker names 2 ASX dividend stocks to buy now
• 5 of the best Aussie stocks to buy now

Motley Fool contributor James Mickleboro has positions in Universal Store. 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 recommended Eagers Automotive Ltd and Universal Store. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.