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 two of the ASX dividend shares that fit the bill:
Whitehaven Coal Ltd (ASX: WHC)
Whitehaven Coal was one of two ASX shares on the list rated as a strong buy. It’s a coal business and is described as the leading coal producer in NSW’s Gunnedah Basin.
The coal price has been rising in recent times thanks to demand in Asia. The company has been delivering record profits, leading to the company being a good dividend share over the past couple of years as it rewards shareholders. It has been paying solid dividends to shareholders and net debt has been reduced too.
Based on the last 12 months of dividends, including special dividends, Whitehaven currently has a trailing dividend of 10.9%. Excluding special dividends, the yield is 6.7%.
Star Entertainment Group Ltd (ASX: SGR)
The other dividend share rated as a strong buy is casino business Star Entertainment.
It has a strong presence in both Sydney and Queensland with a very large investment planned at its Gold Coast location for 3,000 hotel rooms and apartments, with restaurant and bar precincts, entertainment & retail and new resort facilities.
With a growing dividend, Star has a grossed-up dividend yield of 7.6%.
Both of these businesses have solid dividend yields. However, Whitehaven’s dividend is far too dependent on the coal price for me to consider investing in it, therefore Star is my clear favourite of the two. People wanting to stay at high-quality hotels and gambling are two activities likely to be popular for many years to come.
But, I think these ASX dividend shares are even better ideas for income with their defensive income streams.
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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.