Brokers name 2 ASX dividend shares to buy

Brokers believe these dividend shares are in the buy zone…

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If you’re an income investor looking for some new options for your portfolio, then you might want to take a look at the shares listed below.

Here’s why brokers believe they are in the buy zone:

Coles Group Ltd (ASX: COL)

Goldman Sachs is very bullish on the Coles share price at the current level. The broker currently has a buy rating and $19.40 price target on its shares. This implies potential upside of 17% over the next 12 months excluding dividends.

In respect to dividends, Goldman Sachs is expecting Coles to pay fully franked dividends of 62 cents per share in FY 2021 and then 67 cents per share in FY 2022. Based on the current Coles share price, this will mean yields of 3.75% and 4%, respectively, over the next two years.

Goldman commented: “…the longer term outlook remains intact, with Coles remaining well poised to benefit from reinvestment of the smarter selling savings to drive topline growth ahead of market, the launch of the Ocado offering and strong efficiency gains from supply chain investments are expected to come through from FY24.”

Westpac Banking Corp (ASX: WBC)

Analysts at Citi are positive on this banking giant. They currently have a buy rating and $29.50 price target on the company’s shares. Based on the latest Westpac share price, this implies potential upside of 13% over the next 12 months.

Citi is also forecasting generous dividends in FY 2021 and FY 2022 that will enhance the total return on offer. The broker has pencilled in fully franked dividends of 116 cents per share this year and the 118 cents per share next year. This represents yields of 4.4% and 4.5%, respectively.

Citi commented: “The premise of multi-year core earnings upgrades, layered on sector-wide asset quality improvements, leave WBC with a differentiated investment thesis. It remains our sole Buy in a sector that has rallied strongly in the COVID recovery.”

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. 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 COLESGROUP DEF SET. 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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