2 great ASX dividend shares rated as buys by brokers

These 2 ASX dividend shares are rated as buys by brokers, including mortgage broker business Australian Finance Group Ltd (ASX:AFG).
The post 2 great ASX dividend shares rated as buys by brokers appeared first on The Motley Fool Australia. –

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There are a few compelling ASX dividend shares that have bene rated as buys by brokers.

Brokers are constantly on the lookout for opportunities and there are a few dividend shares with high yields that have been picked as buys.

These two businesses are two of the most-liked ASX dividend shares right now:

Dalrymple Bay Infrastructure Ltd (ASX: DBI)

Dalrymple Bay Infrastructure, which owns the Dalrymple Bay Terminal, provides its customers with safe and efficient port infrastructure and services. It owns the world’s largest metallurgical coal export facility and it serves as a global gateway from the Bowen Basin and it’s an important link for the global steelmaking supply chain.

It’s rated as a buy by at least three brokers, including Morgans. The broker’s price target on Dalrymple Bay Infrastructure is $2.57.

Morgans expects the infrastructure business to pay a distribution of $0.18 per share in FY21. At the current Dalrymple Bay Infrastructure share price, it has a forward yield of 7.9%.

The broker thinks that the ASX dividend share’s earnings can grow as it raises its charges for customers.

Anthony Timbrell, managing director and CEO of Dalrymple Bay Infrastructure recently said:

As the world’s largest metallurgical coal export facility, DBI is ideally placed to leverage the strong outlook for global steelmaking as we are fully contracted on a 100% take-or-pay basis until June 2028. This also means we are not exposed to daily volume or commodity price volatility.

DBI forecast funds from operations (FFO), underpinned by cash flow stability and an investment grade balance sheet, should support a sustainable distribution going forward. The company remains on track to pay $45 million in distributions for the six months ended 30 June 2021.

Australian Finance Group Ltd (ASX: AFG)

Australian Finance Group is one of the largest mortgage broking businesses on the ASX.

It has been operating for 26 years, with around 3,000 brokers, more than 200 staff and it works with over 70 lenders.

The broker Macquarie Group Ltd (ASX: MQG) is one of several that rate this ASX dividend share as a buy. It has a price target on the company of $3.06.

Looking at the FY21 expectations, the Australian Finance Group share price is valued at 15x FY21’s estimated earnings with a grossed-up dividend yield of 6.4%.

The mortgage broker is seeing a lot of demand for its services as the housing market booms. Australian Finance Group’s net interest margin (NIM) is increasing too.

In the FY21 half-year result its residential trail book increased by 5% to $160 billion. Underlying cash profit increased by 41% to $24.88 million, whilst earnings per share (EPS) grew 9% to 9.2 cents.

Management said the business was heading into the second half of FY21 with a strong balance sheet, no debt, a solid pipeline of lodgements and good cashflow.

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Returns As of 15th February 2021

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 great ASX dividend shares rated as buys by brokers appeared first on The Motley Fool Australia.

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