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 450 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.
The below ideas have dividend yields above 5% and a market capitalisation above $1 billion. However, a high dividend yield can indicate a falling share price or limited growth prospects.
Here are three of the ASX shares that fit the bill:
Boral Limited (ASX: BLD)
Boral is a construction material business that has operations in multiple countries. It is the only business that’s rated as a strong buy by broker consensus for dividends at the moment.
The share price has fallen by 22% over the past six months, boosting the trailing partially franked dividend yield to 5.3%.
Investor sentiment may be waning about the construction industry, but Australia is still planning an infrastructure-building bonanza over the next few years which should support, and perhaps grow, Boral’s earnings.
It’s currently trading at 12x FY19’s estimated earnings.
Scentre Group (ASX: SCG)
Scentre Group is the business that owns Westfield shopping centres in Australia and New Zealand.
Rising interest rates and growing online sales has seen the Scentre Group share price fall 23% since its high in 2016.
However, whilst those risks are real, Scentre Group maintains a very high occupancy rate which flows through to a pleasing operating profit and a distribution yield of 5.4%.
It’s currently trading at around 16x FY19’s estimated earnings.
Australia and New Zealand Banking Group (ASX: ANZ)
ANZ is one of Australia’s largest banks and has an impressive market position in the residential and business markets.
The ongoing strength of the Australian economy has allowed ANZ to continue paying its impressive grossed-up dividend yield of 9%. As long as the Australian housing market doesn’t collapse, it’s fairly likely that dividend can be maintained for the foreseeable future.
ANZ is currently trading at 11x FY19’s estimated earnings.
The growth of online shopping makes me believe that Scentre Group’s assets will slowly decline in value, except for any growth in the land value. Out of Boral and ANZ, I’d go for Boral because it may be able to keep growing profit due to the infrastructure boom even if Australia’s economy dips.
However, I’m not sure that Boral or ANZ are the best choices today when there are many other ASX shares currently on sale.
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. 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.