Experts say these 2 ASX dividend shares are buys

Experts have named some ASX dividend shares as opportunities.

A business isn’t necessarily a buy just because it pays a dividend. Brokers look for investments that look good in value and have a compelling future.

It’s important to keep in mind that brokers can be wrong about projections for a business, and that no one is perfect. In saying that, below are two potential ASX dividend share ideas.

Super Retail Group Ltd (ASX: SUL)

Super Retail is a retailing business that operates a number of brands including Supercheap Auto, Rebel and BCF.

One of the brokers that currently rates the business as a buy is Credit Suisse, with a price target of $14.40. That implies a possible upside of around 50% over the next year if the broker ends up being right.

Credit Suisse points to a recent trading update as a reason for its optimism.

The ASX dividend share noted that FY22 second half like for like sales for weeks 27 to 43 (compared to FY21) for Supercheap Auto were up 8.4%, for Rebel were down 1.8%, for BCF were up 7.6% and for Macpac were up 1.2%. For the group, like for like sales were up 4.4%.

Supercheap Auto and BCF delivered record Easter trading results, with both of them benefiting from strong consumer demand and high stock availability in categories.

Credit Suisse pointed to the company’s potential to keep growing its store network over the next few years.

The broker thinks that Super Retail is going to pay a grossed-up dividend yield of 10.75% in FY22 and 8.3% in FY23.

Inghams Group Ltd (ASX: ING)

Inghams is one of the largest poultry businesses in Australia.

Credit Suisse also rates Inghams as a buy, with a price target of $4.05. That implies a potential rise of more than 40%.

Inghams has provided commentary that means the second half of FY22 could be weak, according to the broker.

Indeed, in the ASX dividend share’s own words, it said that the second half has been “seriously impacted by the ongoing effects of the COVID-19 Omicron outbreak.” Costs remained elevated across the business, mainly driven by feed, supply chain and transport costs.

While employee attendance levels have improved, COVID-19 continues to affect operations and role vacancies remain elevated due to labour shortages.

However, the company has managed to achieve some price increases. The business is actively seeking price increases to offset the higher costs. Wholesale pricing has recently improved.

It also reported that there has been a product mix shift, which has had a detrimental effect on the profit margin.

That’s why Credit Suisse is expecting the Inghams grossed-up dividend yield to be 4.8% in FY22 and 9.6% in FY23.

The post Experts say these 2 ASX dividend shares are buys appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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 Super Retail Group Limited. The Motley Fool Australia has positions in and has recommended Super Retail Group Limited. 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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