Leading brokers name 2 ASX dividend shares to buy

Brokers up and down Australia have been busy over the last week or so as quarterly results and trading updates were released.

Unsurprisingly, this has led to a number of broker upgrades and downgrades. Two dividend shares which have fared well and been given buy ratings are listed below.

Here’s why leading brokers rate them highly:

Flight Centre Travel Group Ltd (ASX: FLT)

According to a note out of UBS, its analysts have upgraded the travel agent to a buy rating from neutral and given its shares a $53.60 price target. Its analysts believe that Flight Centre is well positioned to outperform in the medium term and has upgraded its earnings estimates through to FY 2021. UBS expects the company to deliver earnings per share of approximately $2.65 in FY 2018, around 14.4% higher than in FY 2017. The broker predicts a dividend of $1.59 per share, equating to a forward fully franked 5.2% yield. If it delivers on the broker’s forecast then I think Flight Centre will prove to be great value today.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Analysts at Morgans have upgraded this airport operator to an add rating following the release of its latest traffic numbers. The broker believes that the increase in international arrivals it has experienced will lead to strong growth in net operating receipts, justifying a price target of $7.14 for its shares. However, the broker has warned that rising bond yields could be a risk. I’m undecided on Sydney Airport. On one hand I think that its estimated forward unfranked 5.1% dividend and exposure to the tourism boom is very attractive, but, on the other hand, I do expect bond yields to rise meaningfully higher this year and could weigh heavily on the shares of bond proxies like Sydney Airport. I would suggest investors consider holding out for a better entry point.

Finally, here's a third dividend share which I think ought to be classed as a strong buy.

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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 and has recommended Flight Centre Travel Group Limited and Sydney Airport 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 Bruce Jackson.

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