2 growing ASX dividend shares for income investors

These ASX shares are growing their dividends…

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Last week the Reserve Bank elected to keep rates on hold at a record low for yet another month. Unfortunately for income investors, this looks set to be the case for some time to come.

In light of this, dividend shares arguably remain the best way to generate a passive income in the current environment.

But which dividend shares should you consider buying? Two that are rated as buys are listed below, here’s what you need to know:

Jumbo Interactive (ASX: JIN)

The first ASX dividend share to look at is Jumbo Interactive. It is an online lottery ticket seller, best-known as the operator of the Oz Lotteries website.

In addition to this, the company has a software as a service (SaaS) business called Powered by Jumbo. This part of the business allows lottery operators to take their lotteries online without having to invest in a development team and build a website.

Given that management estimates that it has a US$303 billion global total addressable market, this gives this side of the business a huge runway for growth in the future.

In the meantime, analysts at Morgan Stanley expect Jumbo to pay shareholders fully franked dividends of 38.3 cents per share in FY 2021 and then 49 cents per share in FY 2022. Based on the latest Jumbo share price, this will mean yields of 2.6% and 3.4%, respectively.

Morgan Stanley has an overweight rating and $15.20 price target on its shares.

Wesfarmers Ltd (ASX: WES)

Another ASX dividend share to consider is Wesfarmers. It is the owner and operator of a diverse group of businesses across several sectors including Bunnings, Catch, Covalent Lithium, Kmart, and Officeworks.

Wesfarmers has been a positive performer this year, delivering a 16.6% increase in half year sales to $17.8 billion and a 25.5% jump in net profit to $1.4 billion. And while trading has been a bit up and down since March as the company cycles the heightened sales from a year earlier, it looks well-placed for growth once trading conditions return to normal.

In addition to this, the company has the balance sheet strength to make some sizeable earnings accretive acquisitions.

Goldman Sachs is expecting dividends of $1.88 per share in FY 2021 and $1.98 per share next year. Based on the current Wesfarmers share price, this will mean fully franked yields of 3.4% and 3.6%, respectively.

Goldman has a buy rating and $59.70 price target on the company’s shares.

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James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited and Wesfarmers 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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