With savings accounts and term deposits still offering very low interest rates, the share market arguably remains the best place to earn a passive income.
But with so many dividend shares to choose from, it can be hard to decide which ones to buy. To help narrow things down, I've picked out two that are highly rated right now. They are as follows:
Baby Bunting Group Ltd (ASX: BBN)
The first ASX dividend share to consider is Baby Bunting. It is a baby products retailer with a strong and growing presence both online and through its collection of 60 national superstores across Australia. Combined, this makes Baby Bunting the clear leader in a less discretionary category with around 300,000 births a year in Australia.
Positively, management still sees significant room to grow its store network in the future, which gives it a long runway for growth over the next decade. It is partly for this reason that the team at Citi is bullish on Baby Bunting. Its analysts have a buy rating and $6.11 price target.
Citi commented: "We reiterate our Buy rating and see the company having a range of multi-year growth strategies including rollout (target of 110+ stores, with 68 expected by end of FY22e), exclusive/private label growth and supply chain efficiencies."
The broker has also pencilled in fully franked dividends per share of 16 cents in FY 2022 and 20 cents in FY 2023. Based on the current Baby Bunting share price, this will mean yields of 3% and 3.7%, 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 with a focus on social infrastructure properties.
These properties are in high demand, which underpinned a 100% occupancy rate and a weighted average lease expiry (WALE) in excess of 15 years in FY 2021. And with approximately three-quarters of its tenancies on fixed rent reviews, the company's future growth looks very positive.
Goldman Sachs is positive on the company. The broker currently has a conviction buy rating and $4.13 price target on its shares. Its analysts note that the Charter Hall Social Infrastructure REIT has just announced the acquisition of two childcare portfolios (in Western Australia and Melbourne) for a total price of $134.3 million and a passing yield of 4.6%.
In response the broker said: "The acquisitions solidify our view that the REIT is positioned for a solid growth outlook given its strong balance sheet with headroom and liquidity to pursue investment opportunities on the back of recent solid asset valuations."
As for dividends, Goldman is forecasting dividends per share of 17.1 cents in FY 2022 and 17.5 cents in FY 2023. This implies yields of 4.5% and 4.6%, respectively.
