2 quality ASX dividend shares that could be buys

These dividend shares are rated as buys…

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ASX dividend shares represented by cash in jeans back pocket

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Are you looking for some quality ASX dividend shares to add to your income portfolio? Then you might want to look at the ones listed below.

Here’s what you need to know about these buy-rated ASX dividend shares:

Coles Group Ltd (ASX: COL)

The first ASX dividend share to look at is Coles. It could be a top option due to its strong market position, defensive qualities, and positive growth outlook. The latter is being underpinned by its long track record of same store sales growth and its focus on automation.

Another positive is the supermarket giant’s favourable dividend policy. This sees the company aim to pay out upwards of 90% of its earnings to shareholders each year as dividends.

One broker that is a fan of Coles is Goldman Sachs. It currently has a buy rating and $19.40 price target on its shares. The broker is also forecasting 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 of $17.28, this represents yields of 3.6% and 3.9%, respectively, over the next two years.

Transurban Group (ASX: TCL)

Another ASX dividend share to consider is Transurban. It is a toll road operator with a portfolio of important roads throughout Australia and North America.

Although traffic has been soft on its roads during the pandemic, it is starting to bounce back. And as traffic levels recover, so too will its distributions. This could make it worth being patient with the company.

Ord Minnett certainly thinks it is worth it and is forecasting a rebound in dividend payments next year. The broker expects dividends per share of 37 cents in FY 2021 and then 58 cents in FY 2022. Based on the current Transurban share price of $14.10, this will mean yields of 2.6% and 4.1% over the next two years.

Ord Minnett has an outperform rating and $16.00 price target on its shares.

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Returns As of 15th February 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 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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