There are some ASX dividend shares that leading brokers think are buys.
These companies are ones that brokers are expecting to pay a large dividend yield over the next financial year and look like they are good value.
An ASX dividend share isn't necessarily worth owning because it pays a dividend, or even a big yield.
Brokers believe there is plenty of share price potential for these two ASX dividend shares which are also expected to pay large income yields:
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New Hope Corporation Limited (ASX: NHC)
New Hope is one of the largest coal miners in Australia. It also has other operations relating to exploration, port operation, oil and agriculture.
It's currently rated as a buy by at least four brokers, including Credit Suisse, which has a price target of $2.70 on the business.
The latest quarter of earnings and its balance sheet gave the broker food for thought about the business.
The three months to October 2021 showed a 3.1% drop of total coal sold whilst total saleable coal production experienced a 17.4% drop. The New Acland site continues to transition into care and maintenance. The final coal sales are expected in November and December.
However, the ASX dividend share noted that thermal coal prices continue to be high and demand remains strong. This helped the business achieve underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter of A$242.5 million.
The debt facility that was reported at 31 July 2021 of A$310 million has been fully paid from operational cash flows.
Credit Suisse has estimated that New Hope is going to pay a grossed-up dividend yield of 21.9% in FY22 and 16.4% in FY23.
Pendal Group Ltd (ASX: PDL)
Pendal is a global investment management business which offers a range of different investment strategies.
It's currently rated as a buy by at least five brokers, including Morgan Stanley which has a price target on the business of $8.80.
The broker was pleased to see the progress of the ESG and impact investing and believes that this earnings avenue is underappreciated by the market.
Its assets in sustainable and impact strategies grew by 68% to $5.2 billion over FY21. Pendal says that this area presents a significant global opportunity for the ASX dividend share. There is a funding gap to meet the UN sustainable development goals, with there also being growing demand for ESG product offerings.
The Regnan Global Equity Impact Solutions strategy was delivered to clients in all regions, attracting flows of around $400 million in its first year. The Regnan Water and Waste Fund was launched in September 2021.
Overall, underlying earnings per share (EPS) increased by 17% to 48.2 cents, whilst total dividends per share went up 11% to 41 cents per share. That means the trailing grossed-up dividend yield is 10.2%.
Based on the estimate from Morgan Stanley, Pendal is expected to pay a grossed-up dividend yield of 11.6% in FY22.
