2 ASX dividend shares rated as buys by brokers

The 2 ASX dividend shares in this article are rated as buys by brokers, including huge resources stock BHP Group Ltd (ASX:BHP).

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Brokers trading shares

Brokers are constantly looking at ASX dividend shares to decide which ones look like good value to buy.

The brokers are looking at things like the profit expectations, the valuation, the operational performance and the outlook.

One broker might say that Australia and New Zealand Banking Group Ltd (ASX: ANZ) is a buy whilst another broker might decide that Telstra Corporation Ltd (ASX: TLS) shares have more growth potential. 

However, if there’s an ASX dividend share that multiple brokers like then it could be one to think about.

BHP Group Ltd (ASX: BHP)

The big resources business just reported its FY21 first-half result to investors. It’s liked by at least four different brokers.

In the report, BHP said that its profit from operations went up 17% to US$9.75 billion, underlying attributable profit rose 16% to US$6 billion, and net operating cashflow rose 26% to US$9.37 billion.

However, reported attributable profit fell 20% to US$3.9 billion. This number included an exceptional loss of US$2.2 billion predominately related to the impairments of New South Wales Energy Coal (NSWEC) and associated deferred tax assets and Cerrejon.

On the dividend front, BHP’s board decided to declare a 55% increase to the interim dividend to US$1.01 per share. Net debt reduced by 7% to US$11.8 billion.

The brokers at Macquarie Group Ltd (ASX: MQG) noted that iron ore made up 70% of the first half profit and copper contributed about a quarter of earnings. Petroleum and coal didn’t contribute much to earnings, they only made up around 5% of earnings.

The dividend declared by the ASX dividend share was 26% higher than Macquarie was expecting.

Looking ahead to the medium-term, Macquarie thinks that the strong price of iron ore will continue to help BHP’s profit in both FY21 and FY22.

Macquarie expects BHP to pay a dividend of just under $2.64 per share in FY21, representing a grossed-up dividend yield of 8%. The broker has a share price target of $50 for BHP.

Amcor CDI (ASX: AMC)

Amcor is one of the world’s largest flexibles and rigid packaging manufacturers. It’s currently rated as a buy by at least four brokers.

The ASX dividend share recently released its FY21 first half result which showed that adjusted earnings before interest and tax (EBIT) climbed 8% to $743 million and adjusted earnings per share (EPS) grew 16% to 33.3 cents in constant currency terms. Reported EPS shot higher by 71% to 26.5 cents.

One of the main highlights from the result was the ongoing synergies being achieved with the acquired Bemis acquisition. At the time, it had achieved $35 million of cost synergies and it’s expecting a total of $70 million of cost synergies over the current financial year.

Broker Morgans said that the half-year result was better than it was expecting, with the ‘flexibles’ division delivering EBIT growth of 9% and rigids EBIT growth of 10%.

Morgans pointed to Amcor’s improved profit expectations. Prior to the half-year report being released, management were expecting underlying EPS to rise between 7% to 12%, now the company thinks underlying EPS can rise between 10% to 14%.

The broker has forecast a total dividend for FY21 of $0.67, which translates to a dividend yield of 4.6%. It has a share price target of $17.10 for Amcor.

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*Returns as of January 12th 2022

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Amcor Limited, Macquarie Group Limited, and Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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