Why ANZ (ASX:ANZ) and this dividend share could be in the buy zone

These shares offer generous yields at current levels…

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With rates still at record lows, the share market remains arguably the best place to earn a passive income.

But which dividend shares should income investors be buying? Two worth considering are listed below. Here’s why they have been tipped as buys:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

The ANZ share price has been a strong performer in 2021. Since the start of the year, the banking giant’s shares have risen a sizeable 22%.

This strong return has been driven by the bank’s impressive performance so far in FY 2021. For example, during the first half, ANZ achieved a statutory profit after tax of $2,943 million and cash earnings from continuing operations of $2,990 million. This was up 45% and 28%, respectively, on the second half of FY 2020.

The good news is that analysts at Morgans are confident that there will be more of the same in the second half and beyond. In light of this, the broker recently retained its add rating and lifted its price target on the company’s shares to $34.50.

Morgans is also forecasting fully franked dividends of $1.45 and $1.63 per share over the next two years. Based on the current ANZ share price of $28.04, this will mean yields of 5.2% and 5.8%, respectively.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Another ASX dividend share to look at is Sydney Airport. Although the recent COVID outbreak in Sydney is likely to hit the airport operator hard in the near term, its longer term outlook remains as positive as ever.

This is thanks to increasing domestic tourism and its position as the main gateway into Australia. The latter is likely to lead to a strong increase in passenger numbers once international borders finally open again.

Goldman Sachs is a fan of the company and believes it would be worth considering a patient investment. It is forecasting an 8.8 cents per share dividend in FY 2021 and then 27.1 cents per share in FY 2022. Based on the current Sydney Airport share price of $5.78, this will mean yields of 1.5% and 4.7%, respectively.

Goldman has a buy rating and $6.73 price target on its shares.

Should you invest $1,000 in ANZ right now?

Before you consider ANZ, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and ANZ wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks 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 has no position in any of the stocks mentioned. 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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