Top ASX dividend shares to buy in May 2022

In times of market turbulence, many investors seek the potential shelter of dividend shares.

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It’s been a stormy month on the Aussie stock market so far in May. So we asked our Foolish contributors to compile a list of ASX shares that experts reckon have a fine outlook with a strong chance of dividend windfalls over the long range. Here is what the team came up with.

7 best ASX dividend shares for May 2022 (smallest to largest)

(Market capitalisations as of 13 May 2022)

Why our Foolish writers love these ASX dividend shares

Adairs Ltd 

What it does: Adairs is a leading ASX retail company operating in the homewares space. It owns traditional brick-and-mortar stores nationally as well as a thriving e-commerce platform.

By Sebastian Bowen: Adairs was definitely something of a COVID winner, and experienced a notable uplift in sales and profits over 2020 and into 2021. The company has been struggling somewhat in 2022 though, with a meaningful share price reduction of close to 40% over the year to date.

However, this has pushed up Adairs’ fully-franked dividend yield to more than 7%. Even if Adairs trims its dividends moving forward, it’s still arguably likely to have a robust dividend yield at the current share price of $2.51. Thus, this often-overlooked dividend share could well be worth a look in May.

Motley Fool contributor Sebastian Bowen owns shares of Adairs Ltd.

Elders Ltd 

What it does: Elders is a 180-year-old agricultural business that provides a range of products and services to support rural communities across Australia and New Zealand.

By Mitchell Lawler: Elders is one ASX dividend share that has continued to go from strength to strength amid the disruption around the world. The Australian agricultural business enjoyed a 22% revenue uplift over the past year as the industry experiences better than usual conditions.

The latest forecasts from the Australian Bureau of Agricultural and Resource Economics (ABARES) suggest the good conditions will persist between June and August. Specifically, there’s a 75% chance of rainfall totals of more than 50mm across much of the company’s key operational regions.

Recently, Goldman Sachs highlighted its conviction buy rating on Elders shares – accompanied by a $17.65 price target, compared to the current $13.99 per share. The company currently offers a dividend yield of 3.00%.

Motley Fool contributor Mitchell Lawler owns shares of Elders Ltd.

Brickworks Limited 

What it does: Brickworks is not only the largest brickmaker in Australia, but also specialises in other building products as well as property and investments.

By Tristan Harrison: Brickworks has been operating for several decades. It’s a major player both in Australia and in the United States.

In terms of dividends, Brickworks hasn’t cut its payment for more than four decades. Management is proud of the company’s reliability as a dividend payer to shareholders.

The business is seeing growth within its industrial property trust, with properties being built on excess Brickworks land. Over the next few years, Brickworks is expecting the trust to complete building properties that add $60 million of gross rental and $1.5 billion of leased asset value to the trust.

The trailing, grossed-up dividend yield on Brickworks shares is around 4.00% based on Friday’s closing share price of $22.15.

Motley Fool contributor Tristan Harrison does not own shares of Brickworks Limited.

Wesfarmers Ltd 

What it does: Wesfarmers is a retail conglomerate that operates some of Australia’s favourite brands including Bunnings, Kmart, and Officeworks.

By Brooke Cooper: An oldie but a goodie, Wesfarmers has been a blue-chip staple among ASX investors for decades. Wesfarmers is also a consistent dividend-paying stock. It’s been handing investors back a portion of its profits since the 1980s.

Broker Morgans believes Wesfarmers has a strong management team and a healthy balance sheet. It also expects the company’s Bunnings brand will continue to attract customers despite uncertain economic conditions.

On top of that, Morgans is expecting the Wesfarmers dividend to grow to a fully-franked, $1.81 per share in the 2023 financial year.

Motley Fool contributor Brooke Cooper does not own shares of Wesfarmers Ltd.

Macquarie Group Ltd 

What it does: Macquarie is among Australia’s largest banks and is primarily involved in investment, commercial banking and asset management.

By Aaron Teboneras: The Macquarie share price has fallen by almost 10% in the past week and could be trading at bargain levels, according to Morgans.

The investment bank delivered its FY22 results earlier this month, reporting double-digit growth across key financial metrics. However, this wasn’t enough to stop its shares from falling due to the market’s lofty expectations.

Nonetheless, the board decided to increase its final dividend by 4.5% to $3.50 for the full year ending 31 March.

The team at Morgans upgraded its outlook on Macquarie shares to ‘add’ from ‘hold’. In addition, the broker raised its 12-month price target by 2.6% to $215 apiece.

Based on Friday’s closing price of $183.11, this represents a potential upside of almost 18% for investors.

Motley Fool contributor Aaron Teboneras does not own shares of Macquarie Group Ltd.

Westpac Banking Corp 

What it does: Westpac is Australia’s oldest banking and financial services group and is one of the largest banks listed on the ASX. 

By James Mickleboro: I think Westpac could be a dividend share to buy in May, particularly given the recent release of the bank’s half-year results. The update revealed cash earnings of almost $3.1 billion and an interim fully franked dividend of 61 cents per share. Both were ahead of the market’s expectations for the period.

But in my opinion, the main reason to be positive is that the bank continues to target a cost base of $8 billion in FY2024, down from $13.3 billion in FY 2021 (including $2.3 billion of one-offs). This is despite two of its peers admitting defeat on their own cost-reduction targets this month due to inflation. If Westpac delivers on this, it should be supportive of earnings and dividend growth in the coming years.

At present, Citi is forecasting fully franked dividends of $1.23 per share in FY2022, $1.55 per share in FY 2023, and $1.80 per share in FY2024. Based on the current Westpac share price at the time of writing, this will mean yields of 5.1%, 6.4%, and 7.5%.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corp.

BHP Group Ltd 

What it does: BHP is one of the world’s biggest miners and is involved in a diversified array of natural resources including iron ore, metallurgical coal, and copper.

By Bernd Struben: On the back of soaring commodity prices, BHP has become a star dividend payer, currently paying a 10.7% trailing dividend yield.

Plato Investment Management’s Peter Gardner believes there’s more to come.

“The big Australian is in a really good position to continue delivering big dividends… During the recent reporting season, BHP announced a record first-half dividend of $1.50 per share, fully franked,” he said. “This dividend was announced along with increasing revenues, increasing earnings, and increasing profit.”

Gardner also believes BHP’s pending merger deal with Woodside Petroleum Limited (ASX: WPL) would be “a tax-effective income opportunity for BHP shareholders”.

Motley Fool contributor Bernd Struben does not own shares of BHP Group Ltd.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO and Brickworks. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, Brickworks, and Wesfarmers Limited. The Motley Fool Australia has recommended Elders Limited, Macquarie Group Limited, and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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