3 ASX dividend shares rated as buys by brokers

Here are 3 ASX dividend shares that are rated as buys by brokers, including Charter Hall Social Infrastructure REIT (ASX:CQE).

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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 150 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:

Aurizon Holdings Ltd (ASX: AZJ)

This is a large owner and operator of rail networks across Australia. It’s a large indirect beneficiary from the fact that Australia produces and exports a large amount of commodities.

It saw solid tonnage in ‘coal’ and ‘network’ in FY20, with the bulk business driven by new contracts and efficiency improvements.

In FY20 Aurizon grew its underlying earnings per share (EPS) by 15% to 27.2 cents, this helped grow the total FY20 dividend by 15% to 27.4 cents per share.

Everything related to the resource sector can be a bit unpredictable, but the medium-term looks fairly promising, though there’s a high reliance on Chinese demand.

At the current Aurizon share price it offers a trailing partially franked dividend yield of 6.7%. I think that’s a solid yield for an infrastructure ASX dividend share.

Charter Hall Social Infrastructure REIT (ASX: CQE)

As the name suggests, this is a real estate investment trust (REIT) which invests in social properties like early learning centres. However, it recently broadened its investment mandate to consider other properties.

For example, it recently announced the $122.5 million acquisition of a property that is under construction which will be the new corporate headquarters of Mater Misericordiae, Queensland’s largest Catholic not-for-profit health provider. The building will also be used for healthcare training facilities.

At 30 June 2020, it had a 99.5% occupancy rate of its 395 properties with a weighted average lease expiry of 12.7 years.

In FY21 it expects to pay distributions amounting to 15 cents per unit over the year, which translates to a distribution yield of 5.4%. That is a good starting yield for an ASX dividend share, which should grow as COVID-19 impacts subside.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Sydney Airport is the operator of Sydney’s main airport. It is currently seeing dramatically reduced air traffic because of the COVID-19 impacts and restrictions.

The Sydney Airport share price is still down by 30% compared to where it was in mid-January, despite Australia’s interest rate now being incredibly low.

Whilst its current earnings are not looking great, there is clearly an expectation that passengers will return at some point in the future, particularly if/when an effective COVID-19 vaccine is produced and distributed.

When passengers return, that will return Sydney Airport’s earnings to a more normal level and its dividends can begin flowing to shareholders again.

But who knows when passenger numbers will return to normal? If we assumed dividends per share of $0.22 per share, that would be a yield of 3.5%. Dividends of $0.39 per share would be a yield of 6.3%. That latter yield would be solid for an infrastructure ASX dividend share. It just depends how quickly passengers and earnings return to normal.

Foolish takeaway

Each of these ASX dividend shares offer compelling dividend potential. Sydney Airport is an interesting COVID-19 recovery idea. Though I’d probably go for Charter Hall Social Infrastructure REIT for my dividend pick because I’m not sure about the reliability of resources or when passengers will return to Sydney Airport.

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Returns As of 16th August 2021

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Aurizon Holdings 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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