With the interest rates on offer with term deposits falling to such low levels, you would have to invest millions into them to earn a sufficient income.
In light of this, the share market looks set to remain the place to earn a passive income for the foreseeable future.
But which shares should you buy? Here are two ASX dividend shares that are rated as buys:
Accent Group Ltd (ASX: AX1)
The first dividend share to look at is Accent. It is a leading leisure footwear-focused retailer which owns a number of popular retail store brands. It also has a rapidly growing online business that has been performing exceptionally well during the pandemic.
A recent update reveals that the company has been performing very strongly in FY 2021. After an impressive start to the year, the company followed this up with an excellent holiday period. For the two months to 27 December, the company’s total sales were up 12.3% and like-for-like sales grew 7.4%.
This means that excluding the closure of Auckland, Victoria, and Adelaide stores, like-for-like sales grew 12.3% during the first half.
Analysts at Citi were impressed with its update and put a buy rating and $2.60 price target on its shares. The broker is also forecasting a 11 cents per share dividend from Accent in FY 2021. Based on the current Accent share price, this represents a fully franked 4.8% dividend yield.
Coles Group Ltd (ASX: COL)
Another dividend share to look at is Coles. As with Accent, the supermarket operator has been a strong performer during the pandemic.
This has been driven by its defensive qualities, strong market position, and favourable changes in consumer spending.
Pleasingly, this strong form has continued in FY 2021 even as COVID headwinds ease and appears to have put Coles in a position to deliver a strong full year result.
Analysts at Citi are confident on Coles as well. The broker has a buy rating and $21.20 price target on its shares. It is also forecasting a 63.5 cents per share fully franked dividend this year. This represents a fully franked 3.5% dividend yield.
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Returns As of 6th October 2020
More reading
- Got money to invest for income? Here are 3 ASX 200 dividend shares
- The Accent Group (ASX:AX1) share price just got hit by a broker downgrade
- Retail sales rose 7% in November to boost ASX retail shares
- 2 ASX dividend shares for income investors
- 3 ASX dividend shares with yields above 4%
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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