Experts name 2 cheap dividend shares to buy now

These dividend shares could be in the buy zone…

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Are you looking for some dividend options for your portfolio? If you are, check out the two ASX shares listed below.

Here’s why these ASX dividend shares have been tipped to as buys:

Baby Bunting Group Ltd (ASX: BBN)

The first ASX dividend share to consider is baby products retailer Baby Bunting.

Citi is a fan of the company and recently reiterated its buy rating and $6.22 price target on the company’s shares. It estimates that the company’s shares trade at 19x forward earnings, which it feels is cheap given its positive growth outlook. This is being supported by its private label business, which a recent survey indicates has a significant growth runway.

Citi commented: “The survey has revealed a range of findings into the baby goods category […] some of the findings from the survey suggest there is a significant runway for growth from the company’s private label program, a relatively small (but growing) demand for second-hand products, improving customer experience and potential that the company may not need all the 110+ stores that it is targeting.”

Citi is forecasting fully franked dividends per share of 16 cents in FY 2022 and 19 cents in FY 2023. Based on the current Baby Bunting share price of $4.23, this will mean yields of 3.8% and 4.5%, respectively.

HomeCo Daily Needs REIT (ASX: HDN)

Another ASX dividend share to look at is the HomeCo Daily Needs REIT. This property company, which recently merged with Aventus, invests in convenience-based assets across target sub-sectors of neighbourhood retail, large format retail, and health and services.

The team at Goldman Sachs is very positive on the company and has a buy rating and $1.70 price target on its shares. The broker believes its shares are cheap at the current level, particularly given its positive growth outlook.

The broker commented: “We believe HDN is undervalued at its current valuation given its diversified tenant base, and see it as well positioned to benefit from the shift to omni channel retailing, with additional external growth opportunities to drive earnings growth over the medium-term.”

As for dividends, it 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 $1.32, this will mean dividend yields of 6% and 6.8%, 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. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Baby Bunting. 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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