Coles Group Ltd (ASX:COL) and this ASX dividend share have recently been named as buys for income investors…
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With interest rates at ultra-low levels and unlikely to be going higher for some time, dividend shares are unsurprisingly very popular with income investors.
If you’re looking to add some to your portfolio to help you through this low interest rate environment, then you might want to read on.
Two ASX dividend shares that are rated as buys are named below:
BHP Group Ltd (ASX: BHP)
BHP is one of the world’s largest mining companies with countless operations across the world. These operations are among the highest quality out there. They include BMA Australia, Nickel West, Olympic Dam, and Western Australia Iron Ore in Australia and Escondida and Spence in Chile.
Due to favourable commodity prices, BHP has been tipped to generate bumper free cash flow again in FY 2021. The good news for shareholders, is that the company’s strong balance sheet means it should be in a position to return a lot of this through dividends.
For example, Macquarie, which has an outperform rating and $44.00 price target on its shares, is forecasting a ~$2.79 per share fully franked dividend. Based on the current BHP share price, this would mean a sizeable 7.1% dividend yield over the next 12 months.
Coles Group Ltd (ASX: COL)
This leading supermarket operator has also been tipped to have a strong year in FY 2021. This is due to the strong sales growth it is delivering thanks to increased demand during the pandemic and rational competition in the industry.
Coles has started FY 2021 very strongly and delivered first quarter revenue growth ahead of expectations. It reported a 10.5% increase in total sales revenue over the prior corresponding period to $9.6 billion.
Goldman Sachs expects this strong form to continue and recently reiterated its buy rating and $20.50 price target. The broker also lifted its dividend forecast for FY 2021 to 64 cents per share. Based on the current Coles share price, this equates to a fully franked 3.5% dividend yield.
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Returns As of 6th October 2020
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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.