2 dirt-cheap ASX shares I would buy today

Cochlear Limited (ASX: COH) is one of the 2 dirt-cheap ASX shares I would buy right now for dividend income and long-term returns.

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I love buying dirt-cheap ASX shares. Buying a good quality company at a cheap price greatly boosts your chances of enjoying market-beating returns in the years to come.

Most of the time, the market prices an ASX share at a reasonable price (that's how markets work, after all). But sometimes, the market gets something wrong, and either gives us investors a chance to sell our shares at far above their true value, or else buy shares at far below their true value.

The 2 ASX shares I'll name below are candidates (in my view) for such a mispricing right now. Here's why.

2 dirt-cheap ASX shares

Telstra Corporation Ltd (ASX: TLS)

Telstra is our first dirt-cheap ASX share. It's the largest telco company on the ASX and has been in the wars of late. Last month, Telstra delivered its results for the 2020 financial year. In this report, Telstra reaffirmed an annual dividend of 16 cents per share, but also implicitly warned that its earnings in FY21 will be unlikely to cover the dividend going forward. However, Telstra does have sufficient free cash flow to cover 16 cents per share, so I think investors are being a little pessimistic on Telstra today. But that also means that new investors can buy Telstra and receive a trailing and fully franked dividend yield of 5.65% on current prices. That's not a bad deal in my view.

Cochlear Limited (ASX: COH)

Cochlear is our second dirt-cheap ASX share to consider today. This company makes hearing aids and other hearing assistive devices and treatments. Much like its fellow health care company CSL Limited (ASX: CSL) Cochlear shares have always commanded a healthy premium compared to other ASX shares. And this premium has been well-deserved. Cochlear is a world-class company that sets the industry standard when it comes to hearing aid products. But I like it today because I think the shares are trading at a rare discount. The Cochlear share price remains more than 24% below its 52-week high and still down around 7% year to date.

Sure, Cochlear has run into some issues during the pandemic, including delays in people getting Cochlear products installed. But in the long term, I don't see any fundamental change to customers needing the services Cochlear provides. As such, I think today's prices are a dirt-cheap deal for a long-term investor. You'll also get a fully franked dividend worth a trailing 1.74% yield while you wait as well.

Motley Fool contributor Sebastian Bowen owns share of Telstra Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Cochlear Ltd. 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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