2 inflation-busting ASX dividend shares that brokers are tipping as buys

Here are a couple of dividend shares that could be top options for income investors…

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If you’re looking for dividend shares to buy to combat inflation then you may want to look at the ones below that brokers are recommending.

Here’s what the brokers are saying about these ASX dividend shares:

Adairs Ltd (ASX: ADH)

The first ASX dividend share that could be a top option is Adairs.

It the leading furniture and homewares retailer behind the Focus on Furniture, Mocka, and eponymous Adairs brands.

While the company has been underperforming in FY 2022 due to COVID headwinds, it has been tipped to bounce back strongly by analysts at Morgans. In light of this, the broker believes the market is undervaluing its shares and has put an add rating and $3.50 price target on its shares.

Morgans recently commented: “In FY23, we expect Focus to have bedded down and to have started a strategy of improving store economics while expanding its footprint. We expect the NDC [national distribution centre] to be up and running and delivering efficiencies. We expect Mocka to be making its first steps towards an omni-channel strategy. These factors underpin an expectation of positive earnings growth in FY23 and FY24, which we do not think are reflected in the multiple. ADD.”

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 $2.79, this will mean yields of 6.8% and 9.3%, respectively, over the next couple of years.

National Australia Bank Ltd (ASX: NAB)

Another ASX dividend share for investors to look at is banking giant NAB.

It could be a top option for investors that are looking to gain exposure to the banking sector. Particularly given its strong position in business banking, the recent acquisition of digital bank 86 400, and the proposed acquisition of Citigroup’s Australian consumer business.

The team at Bell Potter expect the aforementioned acquisitions to allow the bank to “achieve scale in digital and consumer banking offerings.” It is partly for this reason that the broker has a buy rating and $34.50 price target on the bank’s shares at present.

In addition, the broker is forecasting fully franked dividends per share of 136.5 cents in FY 2022 and then 134.5 cents in FY 2023. Based on the current NAB share price of $32.20, this equates to yields of 4.2% and 4.1%, 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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