On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week on a positive note. The benchmark index rose 0.3% to 7,220 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to rise again

The Australian share market is expected to have a strong start thanks to a stellar finish to last week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 64 points or 0.9% higher this morning. In the United States, the Dow Jones rose 1.65%, S&P 500 climbed 1.85%, and NASDAQ pushed 2.25% higher. A strong result from Apple helped boost indices higher.

Westpac half-year results

The Westpac Banking Corp (ASX: WBC) share price will be one to watch on Monday when the banking giant releases its half-year results. As with the other big four banks, strong earnings growth is expected during the half.  Goldman Sachs is expecting cash earnings (before one-offs) to increase 22.2% to $3,781 million, which is a touch short of the consensus estimate of $3,788 million. The broker has also pencilled in a fully franked interim dividend of 72 cents per share.

Oil prices jump

It could be a great start to the week for ASX 200 energy shares such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) after oil prices rebounded strongly on Friday. According to Bloomberg, the WTI crude oil price was up 4.05% to US$71.34 a barrel and the Brent crude oil price rose 3.85% to US$75.30 a barrel. Oil prices rose after the release of strong economic data in the United States. Though, it wasn’t enough to stop oil from recording its third successive weekly decline.

Gold price tumbles

ASX 200 gold shares including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a tough start to the week after the gold price tumbled on Friday night. According to CNBC, the spot gold price dropped 1.5% to $2,024.9 per ounce. Strong economic data appears to have sparked concerns over further rate hikes.

ANZ rated neutral

The team at Goldman Sachs continues to sit on the fence when it comes to ANZ Group Holdings Ltd (ASX: ANZ) shares. In response to the release of the bank’s half-year results, the broker has retained its neutral rating with a $26.17 price target. While it was impressed with the performance of its institutional business, it warned investors not to get carried away. The broker highlights that “previous cycles have shown us that ANZ’s Institutional profitability can inflect suddenly.”

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

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More reading

• Is it time to buy ANZ shares after its strong results?
• Morgans names the best ASX 200 dividend shares to buy in May
• Why did ASX lithium shares dominate the market on Friday?
• Here are the top 10 ASX 200 shares today
• Why ANZ, Block, Pilbara Minerals, and SSR Mining shares are storming higher

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 Westpac Banking Corporation. 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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Do you want a long term passive income boost? If you do, then the ASX 200 dividend shares listed below that analysts rate as a buy could be the way to do it.

Here’s why these could be dividend shares to buy now:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The first ASX 200 dividend share for investors to consider for the long term is Domino’s.

This pizza chain operator’s shares have been sold off this year after tough trading conditions and inflationary pressures weighed on its performance.

While this is disappointing, Morgans remains positive on the company despite its troubles. In fact, it recently said that it believes that “now is the best time to consider an investment in a quality business like DMP that is facing headwinds that will reverse in time.”

And while the company’s dividend yield is lower than average, it has the potential to increase materially in the future thanks to management’s plan to double its store network.

For now, the broker is forecasting partially franked dividends per share of $1.36 in FY 2023 and $1.62 in FY 2024. Based on the current Domino’s share price of $51.30, this will mean yields of 2.65% and 3.15%, respectively.

Morgans has an add rating and an $70.00 price target on the company’s shares.

Transurban Group (ASX: TCL)

Another ASX 200 dividend share that could be a top buy and hold option for income investors is Transurban.

It is one of the world’s leading toll road operators and the proud owner of a world-class collection of roads across several locations.

While times were hard during the pandemic, its roads have recovered so strongly that it achieved record volumes during the first half. Combined with its development pipeline and inflation-linked price increases, the future looks very bright for Transurban.

That may be why UBS is bullish on the company and has a buy rating and $15.45 price target on its shares.

In addition, the broker is forecasting dividends per share of 57 cents in FY 2023 and then 61 cents in FY 2024. Based on the current Transurban share price of $14.73, this will mean yields of 3.9% and 4.15%, respectively.

The post Analysts name 2 ASX 200 dividend shares to buy and hold for a decade appeared first on The Motley Fool Australia.

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More reading

• Better ASX blue-chip share to buy for resilient returns: Coles vs Transurban
• Volatility got you down? 3 steps to building a robust income from ASX 200 dividend shares
• Dalio says US and China ‘on brink of war’. Which ASX shares could be impacted?
• Could buying Domino’s shares at under $55 make me rich?
• Transurban share price jumps on dividend boost

Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. 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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At the small end of the Australian share market, there are a number of companies with the potential to grow materially in the future.

Two that Morgans rates highly and has on its best ideas list this month are named below. Here’s what you need to know about them:

Strandline Resources Ltd (ASX: STA)

The first small cap ASX share that has been named as a buy is Strandline Resources.

This mineral sands developer is a new addition to the best ideas list, with Morgans appearing to be very excited by this “rare investment proposition.” It explains:

STA is a heavy mineral sands explorer and developer, with projects in Australia and Tanzania. We continue to note that STA is a rare investment proposition. It enjoys: 1) 100% ownership of a world-scale/ strategic asset in a tier 1 jurisdiction; 2) lenient debt terms; 3) visibility on upcoming cashflow/ de-risking; 4) proven, backable management; 5) a reputable board; and 6) clear M&A appeal while trading at a material discount.

Morgans has a 75 cents price target on the company’s shares. This compares very favourably to the latest Strandline Resources share price of 34 cents.

Universal Store Holdings Ltd (ASX: UNI)

Another small cap ASX share the broker is bullish on is Universal Store. This youth fashion retailer makes the list again this month thanks to its very positive outlook in a tough retail environment. The broker highlights its strong brands, expansion opportunities, and target demographic as reasons to buy. It said:

Universal Store (UNI) is one of the largest and fastest growing fashion retailers in Australia. Through a national network of over 100 stores and a successful online platform, UNI curates a diverse range of men’s and women’s fashion, shoes and accessories from local and international brands as well as its own private labels. UNI’s stores trade under the Universal Store, Perfect Stranger and THRILLS banners. UNI has opportunities to grow steadily through the rollout of bricks and mortar stores, increased digital penetration and expansion of wholesale channels. We expect some volatility in near-term earnings as consumer demand for highly discretionary categories like apparel ebbs and flows, but we see any share price weakness as an opportunity to buy into a high quality retailer with strong medium to long-term prospects.

Morgans has an add rating and $6.85 price target on the company’s shares. This compares to the current Universal Store share price of $4.40.

The post Morgans names 2 of the best small cap ASX shares to buy appeared first on The Motley Fool Australia.

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• Why these ASX 300 retail shares could be immune to rising interest rates
• Expect big yields from these buy-rated ASX dividend stocks: brokers
• Top ASX shares to buy in May 2023
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• How I’d invest $20k in ASX stocks today to target serious wealth

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 no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Looking for an ASX All Ords stock trading at a sharp discount to its peers?

Then you may wish to run your slide rule over workforce solutions company PeopleIn Ltd (ASX: PPE).

The ASX All Ords stock is trading about flat in 2023 and is down 12% over the past 12 months. That compares to a 3% loss posted by the All Ordinaries Index (ASX: XAO) over that same time.

PeopleIn is also known for its reliable, twice-yearly dividends. Its shares trade on a trailing dividend yield of 4.4%, fully franked.

At the current share price, PeopleIn trades at a price-to-earnings (PE) ratio of about 12 times.

The ASX All Ords stock trading at a 35% discount

Josh Clark, portfolio manager of QVG Capital’s long-short fund, named PeopleIn as the most undervalued share on the ASX.

“PeopleIn is a diversified labour services business that has delivered double-digit organic growth supplemented by sensible acquisitions,” Clark said (courtesy of the Australian Financial Review).

“In fact,” he said of the ASX All Ords stock, “they’re at a 35% discount to the average industrial despite having grown EPS (earnings per share) at 22% over an extended period.”

Addressing potential concerns about why PeopleIn is trading at a steep discount, Clark said:

Stocks are always cheap for a reason but in this case, it’s non-operational. Low liquidity and their gearing capacity appear to be keeping a lid on the valuation. However, if they continue to grow as we expect, these things will be resolved in time.

PeopleIn released its half-year results on 17 February.

The ASX All Ords stock reported revenue of $597 million for the six months, up 89% year on year. Normalised profits came in at $21 million, up 50% from the prior corresponding period.

How has the PeopleIn share price performed longer-term?

As long-term investors, it pays to take a step back to see how a company has fared over more than just the past year.

In the case of this ASX All Ords stock, if you’d bought shares five years ago, you’d be sitting on a gain of 105%. And that doesn’t include the dividend payouts.

The post Fundie reveals the ASX All Ords stock trading at a 35% discount appeared first on The Motley Fool Australia.

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• Morgans expects big returns from these small cap ASX shares

Motley Fool contributor Bernd Struben 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 Peoplein. The Motley Fool Australia has recommended Peoplein. 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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S&P/ASX 300 Index (ASX: XKO) stock Rural Funds Group (ASX: RFF) is one ASX dividend share that I have in my portfolio for passive income.

I think it’s a business worth investing in for the regular, attractive distributions that it pays.

While it doesn’t pay a distribution every week, the ASX 300 stock pays income to investors every quarter. We just need to split that quarterly payment into weekly amounts.

For readers who haven’t heard of Rural Funds, it’s a real estate investment trust (REIT) that owns a portfolio of farmland across Australia. The business is invested in a number of different farm types including almonds, macadamias, vineyards, sugar, cotton, and cropping.

Passive income goal

The ASX dividend share has a goal of increasing its distribution by at least 4% per annum, which it has done since listing several years ago.

Let’s assume for the sake of this article that the FY23 quarterly payment from the ASX 300 stock continues over the next 12 months.

In FY23, it’s expecting to pay a total distribution of 12.2 cents, which is a gross payment of 3.05 cents per quarter.

To get $200 per week, we’re essentially aiming for an annual target of $10,400. To reach that passive income goal, we’re talking about owning 85,246 Rural Funds shares. Buying this many shares would currently come at a cost of around $168,000.

Is Rural Funds a good ASX dividend share?

I think it’s one of the best REITs on the ASX. The 30% or so fall in the Rural Funds share price over the past year has pushed up the distribution yield to 6.2%.

It has 67 properties with quality tenants – around 80% of its forecast FY23 lease revenue is from corporate lessees. Those tenants are on long-term rental contracts, with the current weighted average lease expiry (WALE) being around 12 years. That’s a long time for rent to be locked in.

Higher interest rates are hurting the rental profits of the business. But it’s benefiting from CPI and fixed indexation of its rental income, as well as market rent review mechanisms.

The business also has a development and leasing pipeline, where productivity improvements and conversion to higher and better-use developments are expected to generate earnings growth in future years. For example, its 3,000-hectare development is forecast to be completed by FY25.

Higher interest rates may hurt the ASX 300 stock’s farm values, but I think the Rural Funds share price decline has made up for that.

The post Want $200 in weekly passive income? Buy 85,200 shares of this ASX 300 stock appeared first on The Motley Fool Australia.

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More reading

• Analysts say income investors should buy ANZ and these ASX dividend shares
• Building wealth through dividend investing: 5 ASX shares to boost your income
• 5 reasons I’m still positive about this ASX 300 share despite the 40% drop
• Analysts say these ASX shares will give you a passive income boost
• Need passive income? Turn $5,000 into $25 every month with these ASX shares

Motley Fool contributor Tristan Harrison has positions in Rural Funds Group. 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 positions in and has recommended Rural Funds Group. 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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There are countless ways of valuing businesses before deciding to pull the trigger on an investment. But, one often overlooked method for analysing an ASX share is its free cash flow (FCF) yield.

Essentially, the free cash flow yield measures the net cash generated by the company’s operations relative to its enterprise value. The enterprise value is simply its market capitalisation, plus its total debt, minus its cash and cash equivalents.

Simply put, this metric is similar to the price-to-earnings (P/E) ratio, but for cash flows. You might be thinking: why not just stick with the good ole’ fashioned P/E then?

Follow on to find out what the FCF yield offers over an earning multiple, what a good FCF yield is, and which ASX shares could be ‘good’ value based on this valuation method.

Why free cash flow yield can be useful

So much focus in the investing world is placed on earnings or net profit after tax (NPAT). However, the reality is this figure can sometimes be unintentionally misleading due to a variety of factors.

A common inclusion of a company’s bottom-line earnings is non-operational income. Examples of this might include one-off asset sales or property valuation gains. In such cases, the listed entity suddenly looks dirt cheap based on its temporarily improved P/E ratio.

Unfortunately, unless one is privy to the earnings-altering items, there is a good chance someone could buy into the ASX share believing they’ve found a deal too good to be true.

Whereas, the free cash flow portrays a truer reflection of the returns generated by the company’s operations.

Well, what is a good free cash flow yield? You might ask. Great question.

According to the legendary British investor and CEO of Fundsmith, Terry Smith, a 5% free cash flow yield is the minimum expectation.

During Fundsmith’s 2013 shareholder meeting, Smith explained:

I will only buy companies that have a free cash flow yield which is about 5% or more. The reason for that is if I buy those companies with that yield that is higher than those [4% to 4.5% yielding] bonds I can be sure of one thing… over the long term the free cash flow yield of our companies will rise […] I can be equally sure the coupon (yield) on the bonds won’t go up.

In other words, Smith seeks to own companies that generate a greater expected return than bonds. Which makes sense. If you didn’t think you could get a better return from your ASX shares, you’d buy bonds instead.

Next question… which companies listed in Australia fall into this ‘above 5%’ FCF yield category?

I’m glad you asked.

Which ASX shares are yielding more than 5%?

There are 35 companies on the ASX with a market capitalisation above $100 million and a free cash flow yield above 5% (as of Tuesday afternoon). Additionally, these companies posted a return on capital above 15% in the last 12 months, which is generally considered good.

The ASX shares with the highest FCF yield include coal shares Yancoal Australia Ltd (ASX: YAL), Whitehaven Coal Ltd (ASX: WHC), and Terracom Ltd (ASX: TER) as shown in the chart above. However, coal prices have fallen since the end of 2022, which could lead to a dramatic reduction in future cash flows.

Buying opportunities?

Most of the companies that make the cut are highly cyclical. This means they may not be the best fit for a portfolio if someone is looking for defensive ASX shares.

In saying that, there are still a few businesses that catch my eye as potential buys due to their sturdy balance sheets, growth history, dividends, and free cash flow yield.

Although retail shares could be prone to a weaker economy, the likes of Nick Scali Limited (ASX: NCK), JB Hi-Fi Limited (ASX: JBH), and Dusk Group Ltd (ASX: DSK) look relatively attractive. The share prices of these companies are down 5.6%, 8%, and 34% respectively over the last year.

Personally, I believe JB Hi-Fi is the pick of the bunch given its exceptionally cashed-up balance sheet. At the end of December 2022, the retailer held $391.2 million in cash and zero debt. And, its FCF yield is around 5.7%, surpassing Terry Smith’s bar.

The post Follow the free cash flow: Could these unloved ASX shares be worth buying? appeared first on The Motley Fool Australia.

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• JB Hi-Fi share price lifts on above pre-Covid sales
• Here are the 10 most shorted ASX shares
• This ASX share could pay a 16% dividend yield by 2025
• For a shot at $10,000 in annual passive income, buy 662 shares of this ASX 200 stock
• 2 ASX dividend shares offering exciting yields over 7%

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. 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 Dusk Group and Jb Hi-Fi. 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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Are you looking for new addition to your income portfolio? If you are, then you may want to look at the ASX 200 dividend shares listed below.

That’s because they have both been rated as buys and tipped to provide investors with big, juicy dividend yields.

Here’s what you need to know about these buy-rated ASX 200 dividend stocks:

Stockland Corporation Ltd (ASX: SGP)

The first ASX 200 dividend share that could be a buy is Stockland.

It is a residential and land lease developer and retail, logistics, and office real estate property manager.

Citi is a fan of Stockland and feels the market is being too negative on its outlook. Particularly given its belief that property prices won’t fall as much as feared. In fact, the broker is so positive it has named it as its top pick in the sector.

As for dividends, Citi expects dividends per share of 27 cents in FY 2023 and FY 2024. Based on the current Stockland share price of $4.52, this will mean sizeable yields of 6% in both financial years.

The broker currently has a buy rating and $4.70 price target on its shares.

Whitehaven Coal Ltd (ASX: WHC)

Another ASX 200 dividend share that has been named as buy is Whitehaven Coal.

Morgans is very positive on the coal miner and feels that recent share price weakness has created a buying opportunity for investors.

It highlights that “WHC looks far too oversold on the recent NEWC correction (FY23F FCF yield +40%, P/NPV 0.69x)” and expects “the re-tightening of thermal coal pricing dynamics through April to be a key catalyst for WHC.”

As for dividends, the broker is expecting a 60 cents per share dividend in FY 2023 and FY 2024. Based on the current Whitehaven Coal share price of $6.80, this implies yields of 8.8% for both years.

The broker has an add rating and $9.60 price target on its shares.

The post Analysts expect big, juicy yields from these ASX 200 dividend shares appeared first on The Motley Fool Australia.

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• Did you buy the dip on Whitehaven shares? Here’s the dividend yield you’re earning now
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Invested $12,000 in Whitehaven shares 5 years ago? Here’s how much passive income you’ve earned
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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 no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

BHP Group Ltd (ASX: BHP)

According to a note out of Goldman Sachs, its analysts have upgraded this mining giant’s shares to a buy rating with a price target of $49.90. While the broker has been busy incorporating the OZ Minerals acquisition into its valuation model, that isn’t the reason for the upgrade. Goldman made the move on valuation grounds after a sharp pullback since January. The BHP share price ended the week at $44.05.

Coles Group Ltd (ASX: COL)

A note out of Citi reveals that its analysts have retained their buy rating and $20.20 price target on this supermarket operator’s shares. This follows the release of a quarterly update that came in a little better than Citi was expecting. The broker highlights that the company’s private label offering has been a key driver of this outperformance and appears to believe the trend can continue given the cost of living crisis. The Coles share price was fetching $18.25 at the end of the week.

Woolworths Group Ltd (ASX: WOW)

Another note out of Citi reveals that its analysts have also retained their buy rating and $42.20 price target on Coles’ arch rival. This follows the release of a quarterly update that was well ahead of the broker’s estimates. Pleasingly, Citi believes more of the same could be coming in FY 2024. As a result, it feels the market consensus estimate is too low. The Woolworths share price was trading at $39.08 on Friday.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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More reading

• If I invest $10,000 in BHP shares how much passive income will I receive?
• Analysts name 2 ASX 200 dividend shares to buy for passive income
• 4 ASX 200 shares just upgraded by brokers
• Why the iron ore price is ‘not out of the danger zone’
• Why did the Coles share price underperform the ASX 200 Index in April?

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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group. 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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ANZ Group Holdings Ltd (ASX: ANZ) shares were on form on Friday.

The banking giant’s shares rose 1.5% to $23.80 after the market responded positively to its half-year results.

As a reminder, ANZ reported a record half-year cash profit for the six months ended 31 March.

Its first-half cash earnings from continuing operations came in 12% higher than the prior half at $3,821 million. This was thanks to solid performances across the board and allowed the bank to declare an 81 cents per share fully franked dividend.

What did analysts say about the result?

Goldman Sachs has been looking over the result. While ANZ’s result was slightly ahead of consensus estimates, it was short of its own. It commented:

ANZ’s 1H23 cash earnings were up 23% on pcp and 4% below GSe, with the miss driven by higher expenses, partially offsetting a lower BDD charge, with revenues broadly as expected. The proposed final DPS of A81¢ implied a payout ratio of 64% (non-discounted DRP, which is to be neutralised via an on-market purchase), while the 1H23 CET1 ratio was 13.2% (12.1% on a pro-forma basis; 18.9% globally-harmonised).

In light of this, the broker has revised its earnings estimates lower for “FY23/24/25E EPS by -2.1%/-2.3%/-1.0%.”

Can ANZ shares keep rising?

Although Goldman only has a neutral rating on the bank’s shares, it does appear to believe they could be undervalued.

According to the note, the broker has a neutral rating and $26.17 price target on its shares. This implies potential upside of 10% from current levels.

In addition, Goldman is forecasting fully franked dividend yields of 6.8% per annum all the way through to at least FY 2025.

The broker summarises:

Today’s result provided further evidence of success for ANZ in improving the profitability of its Institutional business. Coupled with current market competitive dynamics, which we would characterise as still a tailwind for NIMs in Institutional, against a rising headwind for NIMs in Retail, ANZ’s business mix appears well-placed positioned.

That said, previous cycles have shown us that ANZ’s Institutional profitability can inflect suddenly, albeit we note the business mix today has evolved significantly versus where it was through the Global Financial Crisis. Risks appear evenly balanced and with our revised TP offering only 14% upside (ex-dividend adjusted; middle of ANZ Financials), we stay Neutral.

Overall, Goldman isn’t rushing in to buy ANZ shares, but appears to believe they could rise from here.

The post Is it time to buy ANZ shares after its strong results? 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 no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The good news for income investors is that there are a large number of quality ASX 200 dividend shares to choose from on the Australian share market.

Two that have been tipped as best buys by analysts at Morgans in May are listed below. Here’s what the broker is saying about them:

QBE Insurance Group Ltd (ASX: QBE)

The first ASX 200 dividend share that Morgans has on its best ideas list is insurance giant. The broker currently has an add rating and $16.96 price target on its shares.

It believes QBE is attractively priced, particularly given how rate increases are still flowing through its insurance book. In addition, the broker highlights its cost reductions plans and strong balance sheet as reasons to be positive. It explained:

With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on 8x FY24F PE.

Morgans is expecting this to underpin dividends per share of approximately 83 cents in FY 2023 and 94 cents in FY 2024. Based on the current QBE share price of $15.35, this will mean yields of 5.4% and 6.1%, respectively.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 dividend share that Morgans has on its best ideas list this month is banking giant Westpac. The broker has an add rating and $25.80 price target on its shares.

Its analysts are positive on Westpac due to their belief that Australia’s oldest bank is well-placed to deliver the best return on equity improvement in the sector. It is expecting this to underpin some big dividend yields in the coming years. It commented:

We view WBC as having the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful. The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book. Yield including franking is attractive for income-oriented investors, while the ROE improvement should deliver share price growth.

The broker is forecasting fully franked dividends per share of $1.53 per share in FY 2023 and $1.59 per share in FY 2024. Based on the current Westpac share price of $21.35, this will mean yields of 7.15% and 7.45%, respectively.

The post Morgans names the best ASX 200 dividend shares to buy in May appeared first on The Motley Fool Australia.

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More reading

• Banking crisis continues: What’s up (and down) with ASX 200 bank shares today?
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• Should you buy the dip in the Santos share price?
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 Westpac Banking Corporation. 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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