When it comes to dividends, the Australian share market is one of the most generous in the world with an average dividend yield of approximately 4%.
This certainly is good news in this low interest rate environment. However, with so much choice it can be hard to decide which ones to buy.
To help narrow things down I have picked out three dividend shares that brokers have recently named as buys. They are as follows:
National Australia Bank Ltd (ASX: NAB)
According to a note out of Goldman Sachs, its analysts have upgraded this banking giant's shares from neutral to a buy rating with a $30.76 price target. The broker made the move as it believes that NAB's exposure to the small to medium sized lending market is a big positive. This is expected to be a volume tailwind for the bank this year and offset some of the weakness in home lending. Goldman expects NAB to maintain its $1.98 per share dividend, meaning its shares offer a forward fully franked 8% yield at present.
Pendal Group Ltd (ASX: PDL)
A note out of Morgan Stanley reveals that it has held firm with its overweight rating and $10.00 price target on this fund manager's shares following its quarterly update. The broker believes that it had a solid quarter considering the challenges it faces in the European and UK markets. Morgan Stanley estimates a full year dividend of 48 cents per share, equating to a forward yield of 6.3%.
Wesfarmers Ltd (ASX: WES)
Analysts at Morgans have retained their add rating but cut the price target on Wesfarmers' shares slightly to $33.09 after this week's trading update. That update revealed that its normally reliable Kmart business underperformed during the Christmas period. Although the broker found this disappointing, it still believes its shares are attractively priced and has suggested that there could be capital management initiatives undertaken in the near future. The broker expects Wesfarmers to declare a full year dividend of $1.90 per share, which works out to be a forward fully franked 5.9% yield.
