The S&P/ASX 200 Index (ASX: XJO) has plenty of shares that have fairly high dividend yields. But only a certain number of ASX 200 dividend shares are rated as buys.
It takes more than just paying a dividend for a business to be attractive. Investors may consider the earnings growth potential or whether the valuation is cheap enough to buy at.
For example, Commonwealth Bank of Australia (ASX: CBA) may be one of the most well-known businesses for paying a higher dividend yield, but most analysts currently rate Australia's largest bank as a sell.
However, the following two ASX dividend share options are rated as buys and also have large prospective dividend yields.
Fortescue Metals Group Limited (ASX: FMG)
Fortescue is one of the biggest businesses in Australia. It's a major player in the iron ore industry.
The mining giant is currently rated as a buy by the brokers at Macquarie with a price target of $21.
Macquarie is forecasting that Fortescue could pay a grossed-up dividend yield of 18.8% in FY22 and 13.5% in FY23.
The broker thinks that the outlook for iron is improving with an increase in demand in China.
One of the things that features in Macquarie's thinking is both the rewards and risks of the Iron Bridge project. The project is now expected to cost quite a bit more than originally anticipated. This project is under development and is expected to deliver 22mt per annum of high grade 67% Fe magnetite concentrate product, further enhancing the range of products available to its customers.
Fortescue said that the innovative process design, including the use of a dry crushing and grinding circuit, will deliver globally competitive capital intensity and operating costs.
The ASX 200 dividend share is also working on green hydrogen projects so that it can become a world leader with that commodity in a decarbonised world.
Coles Group Ltd (ASX: COL)
Coles has seen its share price fall by more than 5% since 30 December 2021. This has had the effect of not only making it cheaper, but also boosting the prospective dividend yield for investors looking for defensive ASX 200 dividend shares.
The supermarket business has delivered reliable and growing earnings during COVID to date, though FY22 is ongoing.
A few different brokers, including Citi, are rating it as a buy. Citi has estimated Coles is going to pay a grossed-up dividend yield of 5.4% in FY22 and 6% in FY23.
Coles is currently building two large automated distribution centres that are expected to make the business more efficient and help make the company more profitable over the longer-term.
Whilst currently battling the effects of the Omicron variant, with supply chain impacts and empty shelves, Coles is still experiencing elevated demand for plenty of its food categories in its supermarkets.
Citi's price target on Coles is $19.60, which is approximately 15% higher than where it is right now. The Coles share price is valued at 22x FY22's estimated earnings.
