Beat inflation with these ASX dividend shares that analysts rate as buys

Here are two buy-rated dividend shares…

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While it looks as though interest rates will soon start to rise, it is still likely to be some time until rates return to normal levels.

So with inflation roaring, dividend shares could remain important for income investors for the foreseeable future.

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 have fallen hard this year due to a disappointing first half performance. 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.

One positive is that on a like for like basis (adjusted for closures), its sales were actually up 2.7% year on year. So with COVID lockdowns now a thing of the past, Adairs’ outlook is improving greatly.

Morgans remains positive on the company and appears to see the sell down of Adairs’ shares as a buying opportunity. It has an add rating and $3.70 price target on its shares.

As for dividends, the broker 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 $2.94, this will mean yields of 6.4% and 8.8%, respectively.

HomeCo Daily Needs REIT (ASX: HDN)

Another ASX dividend share for income investors to look at is the HomeCo Daily Needs REIT. It is a property company investing in neighbourhood retail, large format retail, and health and services.

Goldman Sachs is a fan of the company. The broker believes it is well positioned to benefit from the shift to omni channel retailing. It also notes that HomeCo Daily Needs REIT has additional external growth opportunities to drive earnings growth over the medium-term.

The broker currently has a buy rating and $1.70 price target on its shares. As for dividends, Goldman is forecasting dividends per share of 8 cents in FY 2022 and 9 cents in FY 2023. Based on the current HomeCo Daily Needs share price of $1.44, this will mean dividend yields of 5.5% and 6.25%, respectively.

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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