2 buy-rated ASX dividend shares with growing yields

These dividend shares are growing…

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Are you looking for dividend shares to add to your income portfolio? Then the two listed below could be top options.

Here’s why analysts rate these dividend shares highly:

Adairs Ltd (ASX: ADH)

The first ASX dividend share to look at is Adairs. It is a leading homewares and furniture retailer with both a physical presence and growing online presence. The latter includes through both its core brand and its online only Mocka brand.

Adairs has also recently signed an agreement to acquire Focus On Furniture for $80 million. The team at UBS is a fan of the deal. It believes it could allow Adairs to gain greater exposure to mid-market home furniture categories. This would complete its home furnishing proposition. It also sees opportunities for synergies and store rollouts in NSW and Queensland.

In response, UBS retained its buy rating and lifted its price target on the company’s shares to $5.90.

As for dividends, UBS is forecasting fully franked dividends of 19.6 cents per share in FY 2022 and 29.9 cents per share in FY 2023. Based on the current Adairs share price of $4.03, this will mean yields of 4.9% and 7.4%, respectively.

Transurban Group (ASX: TCL)

A second ASX dividend share to look at is Transurban. It is a toll road operator with a portfolio of important roads throughout Australia and North America.

Although traffic volumes have been impacted by the birder closures and lockdowns, they are expected to rebound now Australia is reopen.

Morgans is positive on Transurban. It recently commented: “We view TCL as a high quality pure-play toll road infrastructure portfolio benefitting from employment and population growth, urbanisation, and the value of time, with particular exposure to the east coast capital cities in Australia. 12 month and five year estimated total return of c.10% and 7.5% pa, respectively.”

The broker is forecasting dividends per share of 35 cents in FY 2022 and then 55.3 cents in FY 2023. Based on the current Transurban share price of $13.98, this implies yields of 2.5% and 4%, respectively. Morgans has an add rating and $14.57 price target on its shares.

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*Returns as of January 12th 2022

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. owns and has recommended ADAIRS FPO. The Motley Fool Australia owns and has recommended ADAIRS FPO. 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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