While the outlook for interest rates is becoming increasingly positive, it is still likely to be some time before rates are at a sufficient level for income investors.
In light of this, ASX dividend shares could remain the best option for them in the near term. But which dividend shares could be top options?
Two high yield options to consider are listed below. Here's what you need to know about them:
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Adairs Ltd (ASX: ADH)
The first ASX dividend share to look at is this furniture and homewares retailer. Its shares have been hammered this year due to its poor performance during the first half.
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 period. On a like for like basis and adjusted for closures, its sales were up 2.7% year on year.
Analysts at Morgans believe now is not the time to throw the towel in. The broker thinks the sell down of Adairs shares was overdone and has created a buying opportunity. So much so, it has put an add rating and $3.50 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 $2.95, this will mean yields of 6.4% and 8.8%, 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 pay big dividends in the coming years.
This is being supported by demand for commodities such as aluminium and the recent acquisition of a stake in the Sierra Gorda copper mine in Chile.
Analysts at Goldman Sachs expect South32 to pay fully franked dividends that equate to yields of 8% in FY 2022 and then 14% in FY 2023 and FY 2024.
The broker also sees plenty of upside for the South32 share price at current levels. It has a conviction buy rating and $5.90 price target on the miner's shares. This compares to the current South32 share price of $4.82.
