The 3 ASX dividend shares in this article are rated as buys by brokers including retailer Harvey Norman Holdings Limited (ASX:HVN).
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It can be an interesting insight to know what brokers think of an ASX dividend share. The problem is that a single broker can be wrong or biased.
If you can get a consensus among brokers about which shares are best, then that may give a clue about what to buy and what to avoid.
Every so often MarketIndex collates the broker recommendations of 150 ASX shares and totals the buys, holds and sells for those shares. The higher or lower the average score the more of a strong buy, buy, hold, sell or strong sell that share is rated.
The below shares have dividend yields above 5% and a market capitalisation above $1 billion. However, MarketIndex cautioned that a high dividend yield can indicate a falling share price or limited growth prospects.
Here are three of the ASX dividend shares that fit the above screens:
Harvey Norman Holdings Limited (ASX: HVN)
Harvey Norman Holdings is the business that is behind the Harvey Norman stores that sell appliances, devices, furniture and so on. In Australia it operates a franchisee model. According to the ASX, Harvey Norman has a market capitalisation of $5.63 billion.
The ASX share reported double digit profit growth in FY20. Profit after tax went up 19.4% to $480.5 million whilst profit after tax excluding AASB 16 and revaluations went up 30.9%.
There has been a vibrant retail performance this year by several ASX retailers such as JB Hi-Fi Limited (ASX: JBH), Adairs Ltd (ASX: ADH) and Nick Scali Limited (ASX: NCK) despite the impacts of COVID-19.
At the end of FY20 it paid a special dividend of 6 cents per share and also just paid a dividend of 18 cents per share. That brings the trailing grossed-up dividend for the ASX share to 7.55% at the current Harvey Norman share price.
DEXUS Property Group (ASX: DXS)
Dexus is one of Australia’s biggest real estate businesses – it’s a real estate investment trust (REIT). It owns $16.5 billion of office and industrial properties.
The REIT has a market capitalisation of $9.84 billion according to the ASX. The Dexus share price is still down by 33% compared to the pre-COVID-19 crash price.
Dexus recently gave an update. For the three months to 30 September 2020, it said its office occupancy by income was 95.4%, down from 96.5% at 30 June 2020. However, its office weighted average lease expiry (WALE) increased by 0.1 years to 4.3 years. The industrial portfolio’s occupancy by income reduced to 94.8% at 30 September 2020 and the WALE was maintained at 4.1 years.
The REIT has a $10.4 billion development pipeline, which it says provides the opportunity to grow and enhance future returns.
In terms of the distribution guidance, the ASX dividend share is expecting the distribution to be consistent with the FY20 distribution guidance of 50.3 cents which amounts to a yield of 5.6% at the current Dexus share price if it were to pay the same distribution again.
Aurizon Holdings Ltd (ASX: AZJ)
This is a railroad business that owns a large railway network that carries a lot of resources across its network.
According to the ASX, its market capitalisation is $7.13 billion.
FY20’s profit growth supported growth of the dividend. Its underlying earnings per share (EPS) went up by 15% to 27.2 cents and statutory EPS grew by 30%. That helped FY20’s total dividend climb by 15% to 27.4 cents.
At the current Aurizon share price, that trailing dividend amounts to a dividend yield of 9.5% with the Aurizon share price falling by around 25% since 3 July 2020.
In FY21 Aurizon is expecting underlying earnings before interest and tax (EBIT) to be between $830 million to $880 million, which would represent a decline from $909 million in FY20.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia has recommended ADAIRS FPO and Aurizon Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.