If you're looking for income, then the ASX 200 could be a great place to start. The benchmark index is filled with quality companies that share a good portion of their profits with shareholders.
Two ASX 200 dividend shares that have been tipped as buys are listed below. Here's what you need to know about them:
Image source: Getty Images
South32 Ltd (ASX: S32)
The first ASX 200 dividend share to consider is South32. It is a diversified mining and metals company producing alumina, aluminium, bauxite, energy and metallurgical coal, lead, manganese, nickel, silver, and zinc. It has also just added copper to its portfolio via a key earnings accretive acquisition in Chile.
Thanks partly to its exposure to aluminium, which is believed to be in the early stages of a multi-year bull market, analysts are expecting South32 to generate significant free cash flow over the coming years.
So much so, the team at Goldman Sachs is forecasting double-digit, fully franked dividend yields through to at least FY 2026. In light of this, the broker has a conviction buy rating and a $4.40 price target on its shares. This compares favourably to the latest South32 share price of $3.81.
Telstra Corporation Ltd (ASX: TLS)
Another ASX 200 dividend share to consider is Telstra. Thanks to the successful execution of its T22 strategy and the recently announced T25 strategy, it is expecting to return to growth at long last in the near future.
Telstra's CEO, Andrew Penn, recently highlighted that T22 was based on transforming the company, whereas T25 will be about driving growth. He is targeting high-teens underlying earnings per share (EPS) compound annual growth rates (CAGR) from FY 2021 to FY 2025.
Morgans is very positive on Telstra. It currently has an add rating and a $4.55 price target on the company's shares. The broker also expects fully franked dividends per share of 16 cents in FY 2022 and FY 2023.
Based on the latest Telstra share price of $4.11, this will mean 3.9% yields for investors.
