Fortunately, in this low interest rate environment, there are countless dividend shares for investors to choose from on the Australian share market.
But with so many to choose from, it can be hard to decide which ones to buy. To narrow things down, I have picked out three ASX dividend shares brokers think investors should buy:
APA Group (ASX: APA)
According to a note out of Ord Minnett, its analysts have upgraded this utilities company's shares to a buy rating with a $10.75 price target. The broker is positive on the company for a number of reasons. This includes its attractive valuation, strong free cash flow generation, and growth opportunities. It also expects generous dividend yields in the coming years. Ord Minnett has pencilled in dividends per share of 53 cents in FY 2022 and then 54 cents in FY 2023. Based on the current APA share price of $9.30, this will mean yields of 5.7% and 5.8%, respectively.
Fortescue Metals Group Limited (ASX: FMG)
A note out of Macquarie reveals that its analysts have retained their outperform rating but trimmed their price target on this mining giant's shares to $25.00. Although Macquarie acknowledges that iron ore prices are falling, the broker believes Fortescue can still maintain a double digit free cash flow yield. This is due to its reducing capex offsetting iron ore price declines. The broker expects this strong free cash flow to support further big dividend payments in the near term. Macquarie is forecasting dividends per share of $2.45 in FY 2022 and $1.63 in FY 2023. Based on the current Fortescue share price of $17.92, this represents massive fully franked yields of 13.7% and 9.1%, respectively.
Sonic Healthcare Limited (ASX: SHL)
Analysts at Credit Suisse have retained their outperform rating and lifted the price target on this healthcare company's shares to $46.50. According to the note, the broker expects Sonic to benefit from higher than expected COVID-19 testing volumes for a little while to come. It also believes that reimbursement rates for testing are unlikely to be cut given how there is an election due next year. All in all, the broker expects this to underpin strong earnings and dividends. Credit Suisse has forecast partially franked dividends per share of 97.4 cents in FY 2022 and 102 cents in FY 2023. Based on the current Sonic share price of $41.75, this will mean yields of 2.3% and 2.5%, respectively.
