These dividend shares could offer investors attractive yields…
The post 2 ASX 200 dividend shares rated as buys appeared first on The Motley Fool Australia. –
Are you looking to add some dividend shares to your portfolio? Then take a look at the buy-rated ones listed below.
Here’s why they could be top options for income investors this week:
Fortescue Metals Group Limited (ASX: FMG)
The first ASX dividend share to look at is Fortescue. It is one of the world’s leading iron ore producers with high quality operations in the Pilbara region of Western Australia.
The mining giant is currently benefiting greatly from sky high prices that are being commanded for the steel making ingredient. For example, at present, the spot iron ore price is trading at ~US$218 a tonne, which compares very favourably to the company’s cash costs of US$13.50 to US$14.00 per wet metric tonne.
And even though Fortescue’s lower grade ore doesn’t command as high a price, it is still generating material free cash flow right now. And given management’s track record of returning funds to shareholders, this bodes well for dividends in the near term.
Macquarie is positive on the company and is forecasting big dividends in the near term. It expects Fortescue to pay dividends of $3.45 per share in FY 2021 and then $2.45 per share in FY 2022. Based on the latest Fortescue share price of $23.63, this will mean fully franked yields of 14.6% and 10.4%, respectively.
Macquarie has an outperform rating and $27.00 price target on the miner’s shares.
Westpac Banking Corp (ASX: WBC)
Another ASX 200 dividend share to look at is Westpac. After a few tough years, Australia’s oldest bank looks well-placed for a return to growth. This is thanks to improving trading conditions, the simplification of its business, a booming housing market, and cost cutting.
In respect to the latter, Westpac is aiming to reduce its costs down to $8 billion from $12.7 billion by 2024. If it can combine this with top line growth, then it will bode very well for earnings and dividend growth over the next three years.
Analysts at Morgan Stanley are positive on Westpac and have recently retained their buy rating and $29.20 price target on the company’s shares. The broker is also forecasting fully franked dividends per share of $1.18 and $1.25 over the next two years.
Based on the latest Westpac share price of $25.65, this will mean yields of 4.6% and 4.9%, respectively.
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Returns As of 15th February 2021
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Motley Fool contributor James Mickleboro owns shares of 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 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 Bruce Jackson.