2 ASX 200 dividend shares rated as buys

These dividend shares offer investors attractive yields…

| More on:
A stopwatch ticking close to the 12 where the words on the face say 'Time to Buy' indicating its the bottom of the falling market and time to buy ASX shares

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Are you looking to add some dividend shares to your portfolio? Then take a look at the ones listed below.

Here's why they could be top options for income investors this week:

Fortescue Metals Group Limited (ASX: FMG)

Fortescue is one of the world's leading iron ore producers and is benefiting greatly from the sky high prices being commanded by the steel making ingredient.

At present, the spot iron ore price is trading at ~US$220 a tonne. And even though Fortescue's lower grade ore doesn't command as high a price as that, it is still receiving significantly more than its costs per tonne. This means Fortescue is generating material free cash flow right now. And given management's penchant for returning funds to shareholders, this bodes well for dividends in the near term.

According to a note out of Macquarie from last week, the broker expects Fortescue to pay dividends of $3.40 per share in FY 2021 and then $2.43 per share in FY 2022. Based on the latest Fortescue share price of $23.22, this will mean fully franked yields of 14.6% and 10.5%, respectively.

Macquarie has an outperform rating and $27.00 price target on the miner's shares.

Wesfarmers Ltd (ASX: WES)

Another option to consider is Wesfarmers. This conglomerate has been performing very positively in FY 2021 thanks to solid growth across the majority of its businesses.

The star of the show has been the key Bunnings business. The hardware giant has been benefiting from home improvement-related government stimulus and the booming housing market. This led to Bunnings reporting a 35.8% increase in earnings before interest and tax (EBIT) to $1,274 million. This represents 62% of Wesfarmers' EBIT of $2,058 million for the half.

Macquarie is also a fan of Wesfarmers and currently has an outperform rating and $58.12 price target on its shares.

The broker is forecasting fully franked dividends of $1.74 per share in FY 2021 and $1.76 per share in FY 2022. Based on the latest Wesfarmers share price of $55.00, this represents attractive yields of 3.15% and 3.2%, respectively.

James Mickleboro does not own any shares mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Dividend Investing

A mature-aged couple high-five each other as they celebrate a financial win and early retirement
Dividend Investing

5 top ASX dividend shares to buy right now

Analysts think income investors should be loading up on these shares.

Read more »

Two adults and a child look happy as they walk through airport with child sitting on suitcase.
Dividend Investing

Will Qantas shares pay a dividend in 2024?

Will the dividends return this year? Let's find out.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Dividend Investing

2 market-leading ASX dividend stocks to buy in April

Analysts have put buy ratings on these market-leaders.

Read more »

Father in the ocean with his daughters, symbolising passive income.
Dividend Investing

I'd spend $8k on these ASX 200 shares today to target a $6,102 annual passive income

I believe these ASX 200 shares will continue rewarding passive income investors for years to come.

Read more »

Man holding Australian dollar notes, symbolising dividends.
ETFs

Want the latest dividend from the Vanguard Australia Shares ETF (VAS)? Here's what you have to do

If you want to bag the latest VAS dividend, here's what you need to do.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Dividend Investing

Investing for passive income? Keep any eye out for that boosted Telstra dividend today!

If you own Telstra shares, keep an eye out for that juicy dividend payout today.

Read more »

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Dividend Investing

Invest $12,000 in Woodside stock and get $5,700 in passive income

Reliable dividend shares are everywhere on the ASX. Here's how you could use that to your advantage.

Read more »

Australian dollar notes in businessman pocket suit, symbolising ex dividend day.
Dividend Investing

3 ASX 300 dividend shares to buy in April

These shares have been named as buys by brokers and tipped to offer very attractive yields.

Read more »