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Leading brokers name 3 ASX dividend shares to buy

When it comes to dividends there are countless options for investors to choose from on the Australian share market.

There are so many it can be hard to decide which ones to buy. To narrow things down I have picked out three dividend shares that brokers think investors should buy this month:

BHP Group Ltd (ASX: BHP)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating but cut the price target on this mining giant’s shares slightly to $39.00. According to the note, the broker was happy with BHP’s performance in the first quarter. It was also pleased to see the company retain its production  and cost guidance for the full year. In light of this, the broker continues to see value in BHP’s shares at this level. In FY 2020 Macquarie estimates that BHP will pay a 218 cents per share dividend, which equates to a fully franked 6.25% dividend yield. I agree with Macquarie and feel BHP would be a good option for investors looking for exposure to the resources sector.

Challenger Ltd (ASX: CGF)

Another note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and lifted the price target on this annuities company’s shares to $8.50 following its first quarter update. According to the note, Macquarie was pleased with Challenger’s performance in the quarter, particularly in respect to Japanese annuities and guaranteed income products.. In addition to this, Macquarie believes that its earnings will stabilise in the near term. Just as long as the RBA doesn’t make several more cash rate cuts. In FY 2020 Macquarie expects a dividend of 35.5 cents per share. This equates to a forward fully franked 4.6% yield. Whilst it does look good value, I’d like to see the company return to growth before considering an investment.

National Australia Bank Ltd (ASX: NAB) 

According to a note out of Goldman Sachs, its analysts have retained their conviction buy rating and $30.40 price target on this banking giant’s shares. Goldman has been looking into APRA’s amended capital treatment of investments in subsidiaries. The good news is that it sees no impact to NAB. As a result, it remains bullish and continues to rate it as the best pick in the sector. Goldman prefers NAB due to its belief that it has superior revenue momentum. It also expects NAB to deliver the strongest underlying earnings per share growth over the next three years. The broker estimates that its shares offer a fully franked 5.7% FY 2020 dividend yield at present. I agree that NAB would be a good option for income investors.

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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 Challenger Limited. The Motley Fool Australia owns shares of National Australia Bank 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 Scott Phillips.

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