Fortunately for income investors in this low interest rate environment, there are a good number of dividend shares on the Australian share market with attractive yields.
Two ASX dividend shares to consider buying are listed below. Here's what you need to know about them:
Fortescue Metals Group Limited (ASX: FMG)
At present, the spot iron ore price is trading around the US$160 per tonne mark. As a comparison, Fortescue's C1 costs are approximately US$12.74 per wet metric tonne.
It doesn't take a rocket scientist to see that this is leading to material free cash flow generation by the mining giant. And with the company's balance sheet is such good health, the majority of this free cash flow is likely to be returned to shareholders through dividends.
One broker that is forecasting bumper dividends from Fortescue is Macquarie. It expects the company to reward shareholders with a fully franked interim dividend of $1.37 per share. Based on the current Fortescue share price, this interim dividend alone represents a yield of 5.8%.
For the full year, the broker estimates that its shares offer an 8.6% yield. They also see upside for its shares and have an outperform rating and $26.50 price target on them.
Wesfarmers Ltd (ASX: WES)
This conglomerate has been a very positive performer over the last 12 months. This has been driven partly by its key Bunnings business, which has been experiencing strong sales growth during the pandemic. The hardware giant has been benefiting from government stimulus and consumers redirecting their spending from holidays to home improvements.
The good news is that Bunnings continues to perform well and recently reported stellar sales growth. This was supported by strong growth across other businesses such as Kmart, Target, and Catch.
Macquarie is positive on Wesfarmers as well and recently upgraded its shares to an outperform rating with a $60.00 price target. Its analysts are forecasting a 150.3 cents per share fully franked dividend in FY 2021. Based on the current Wesfarmers share price, this represents a 2.7% yield.
