Although the outlook for interest rates is becoming increasingly positive, it is still likely to be some time until rates are at a sufficient level for income investors.
In light of this, ASX dividend shares could be the best option for them for a little while to come. But which dividend shares could be top options?
Two to consider are listed below. Here's what you need to know about them:
Adairs Ltd (ASX: ADH)
The first ASX dividend share to look at is this furniture and homewares retailer. Its shares are trading far closer to their 52-week low than high right now after a disappointing first half trading update.
However, it is worth noting that this was driven by COVID lockdowns, which led to Adairs losing almost a third of its trading days during the half. On a like for like basis and adjusted for closures, its sales were up 2.7% year on year.
The team at Morgans don't believe now is the time to throw in the towel. The broker believes the sell down of Adairs shares was overdone and has created a buying opportunity. So much so, it has put an add rating and $3.70 price target on its shares.
As for dividends, it is forecasting fully franked dividends of 19 cents per share in FY 2022 and 26 cents per share in FY 2023. Based on the current Adairs share price of $3.11, this will mean yields of 6.1% and 8.4%, respectively.
South32 Ltd (ASX: S32)
Another ASX dividend share to look at is this mining giant. It has been tipped to generate strong free cash flow and reward shareholders handsomely in the coming years.
This is being underpinned by its exposure to a number of in-demand commodities such as aluminium and the recent acquisition of a stake in the Sierra Gorda copper mine in Chile.
Analysts at Goldman Sachs expect this to allow South32 to pay fully franked dividends that equate to yields of greater than 10% over the next five years.
The broker also sees decent upside for the South32 share price. It has a conviction buy rating and $5.00 price target on the miner's shares. This compares to the current South32 share price of $4.53.
