2 excellent ASX dividend shares rated as buys

Analysts rate these ASX dividend shares highly…

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With interest rates likely to remain at low levels for some time to come, dividend shares may remain the best way to generate a passive income for a while yet.

But which dividend shares should you consider? Two that have been given buy ratings are listed below:

Coles Group Ltd (ASX: COL)

The first ASX dividend share to look at is Coles. It could be a quality option due to its strong market position, cost cutting and automation plans, and its favourable dividend policy.

And while its sales and earnings may go in reverse in the immediate term due to elevated sales from a year earlier, it is expected to return to growth again once the tough comparables ease.

Goldman Sachs expects this to be the case and is forecasting solid dividend growth in both FY 2021 and FY 2022. The broker has pencilled in fully franked dividends per share of 62 cents per share in FY 2021 and then 67 cents per share in FY 2022.

Based on the latest Coles share price of $17.05, this will mean yields of 3.6% and 3.9%, respectively. Goldman has a buy rating and $19.40 price target on the supermarket giant’s shares.

Transurban Group (ASX: TCL)

Another ASX dividend share to consider is Transurban. It is one of the world’s leading toll road operators that owns a portfolio of key roads across Australia and North America.

Although traffic volumes have been under pressure because of the pandemic, they continue to improve as restrictions ease and mobility increases. This bodes well for its distributions in the coming years after lower than normal payouts because of COVID-19.

One broker that remains positive on Transurban and is expecting it distributions to rebound strongly is Macquarie. Last week it put an outperform rating and $15.20 price target on the company’s shares.

Macquarie is forecasting dividends of 36 cents per share in FY 2021 and then 59.1 cents per share in FY 2022. Based on the latest Transurban share price of $14.49, this will mean yields of 2.5% and then 4.1%.

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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 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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