2 top ASX dividend shares tipped as buys

Here are two dividend shares analysts rate as buys…

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With savings accounts and term deposits only offering very low interest rates, the share market arguably remains the best place to earn a passive income.

But which ASX dividend shares should you consider buying? Two buy-rated ASX dividend shares to look closely at are listed below:

Carsales.Com Ltd (ASX: CAR)

The first ASX dividend share to consider is Carsales. It is the leading auto listings company in the ANZ market and also operates a number of similar websites across the world.

This will soon include the US-based Trader Interactive, which has a focus on the commercial truck, recreational vehicle, powersports, and equipment industries. Carsales recently raised funds to acquire a 49% stake in the company for US$624 million (A$800 million). It also has a call option to acquire the remaining interest on specified terms in the future.

UBS appears positive on the company’s growth prospects. It currently has a buy rating and $24.50 price target on its shares. The broker is also forecasting fully franked dividends of 44 cents per share in FY 2021 and 50 cents per share in FY 2021. Based on the latest Carsales share price of $21.48, this represents yields of 2% and 2.3%, respectively.

Charter Hall Social Infrastructure REIT (ASX: CQE)

Another ASX dividend share to look at is the Charter Hall Social Infrastructure REIT. It is a real estate investment trust focused on social infrastructure properties. These includes properties such as childcare centres and government sites.

At the end of the first half of FY 2021, the company was enjoying an occupancy rate of 99.7% and a weighted average lease expiry (WALE) of 14 years. Since then, things have got even better. A recent update reveals that its WALE has lengthened again following a series of contract renewals.

Things have been going so positively for the company that it recently advised that it intends to pay a 4 cents per unit special distribution in FY 2021. This will increase its fully year distribution to 19.7 cents per share. Based on the current Charter Hall Social Infrastructure REIT share price pf $3.50, this will mean a yield of 5.6% for income investors.

Goldman Sachs currently has a conviction buy rating and $3.84 price target on its shares. It commented: “We allow for at least 2.5% LFL rental growth over the next three years, given 63% of the portfolio leases are on fixed annual reviews (an average of 3% increase). However, we note 37% of the portfolio leases are CPI linked, providing protection in a reflationary environment.”

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*Returns as of August 16th 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 recommended carsales.com Limited. 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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