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 dividend shares that fit the bill:
Whitehaven Coal Ltd (ASX: WHC)
Whitehaven Coal was the only share on the list rated as a strong buy. As the name might suggest, it’s a coal business. It describes itself as the leading coal producer in NSW’s Gunnedah Basin.
The recent strength of the coal price thanks to demand in Asia and record profits from Whitehaven has led to the miner being a surprisingly good dividend share over the past couple of years. Not only have the dividends been flowing but net debt reduced in the recent result as well.
Based on the last 12 months of dividends, including special dividends, Whitehaven currently has a trailing dividend of 11%. Excluding special dividends, the yield is 6.8%.
Viva Energy Reit Ltd (ASX: VVR)
As the name might suggest, it’s a real estate investment trust (REIT) that owns over 400 service station sites which it leases to Viva Energy Group Ltd (ASX: VEA), which we see on the roads as Coles Express locations.
With an 100% occupancy rate, a weighted average lease expiry rate (WALE) of over 12 years and 3% per annum rent increases built in it’s easy to see why this REIT could be a solid income performer for the next several years. Additional acquisitions can also boost earnings over time.
It currently has a distribution yield of 5.8%.
Boral Limited (ASX: BLD)
Boral is the country’s largest building and construction materials business. Worries about the state of the Australian construction market has sent the Boral share price down in recent months, but the dividend continues to grow each result.
The December 2018 report saw a 4% increase of the dividend to 13 cents per share. Its trailing partially franked dividend is 5.4%.
I can see why each of these businesses are ideas as buys for both the share price and the dividend, but I don’t like the idea of investing in a coal business or Boral. Viva Energy REIT seems to offer a solid dependable yield but I think there are better options.
It’s ASX dividend shares like these that fit the bill for great income in my opinion.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.