2 ASX dividend shares rated as buys by experts amid inflation volatility

BHP is one of the ASX dividend shares liked by brokers.

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Key points

  • Inflation and share market volatility is elevated, but these two ASX dividend shares could be options
  • BHP is one of the world’s biggest resource businesses
  • Metcash is a diversified supplier to different sectors

There are some ASX dividend shares that may be able to provide attractive cash returns for investors amid the ASX share market volatility.

While any business can fall during widespread falls, some businesses still show a gain over the last six months. These companies are also expected to pay sizeable dividends in the next few results.

With that in mind, here are two ASX dividend shares that experts currently rate as buys:

BHP Group Ltd (ASX: BHP)

While the BHP share price closed down by 1.66% at $46.23 today, it is still up by around 26% over the last six months.

Higher inflation may be a tricky thing for some sectors to deal with. However, 2022 has largely been a strong year for commodity prices, which has helped the related resource companies.

BHP is on the verge of divesting its petroleum business to Woodside Petroleum Limited (ASX: WPL). This will leave BHP with exposure to iron ore, copper, nickel, coal, and potash.

BHP thinks that decarbonisation will be helpful for copper, nickel, and potash demand over time. Indeed, the miner is looking to accelerate its potash plans amid the Russian invasion of Ukraine.

The iron ore price has drifted lower over the last few weeks amid the lockdowns in China. However, the iron price remains higher than it was in the last quarter of the 2021 calendar year.

Morgans currently rates the ASX dividend share as a buy with a price target of $54.30. That implies a possible double-digit return of the BHP share price, after a 12% decline over the last month.

Morgans’ dividend estimates imply that the grossed-up dividend yield will be 12.2% in FY22 and 9.1% in FY23.

Metcash Limited (ASX: MTS)

Metcash is a business with multiple segments.

It has a liquor segment that is a large supplier of liquor to independently owned liquor retailers in Australia. Some of the brands it supplies include Cellarbrations, The Bottle-O, IGA Liquor, Duncans, Thirsty Camel, Big Bargain, and Porters.

Metcash has a food division that supplies IGA and Foodland supermarkets.

In its hardware division are Mitre 10, Home Timber & Hardware, and Total Tools.

Despite a heavy fall of 6.54% today to $4.29, the Metcash share price is still up more than 4% in the last six months.

The ASX dividend share has been busy in May. Earlier this week, it extended the agreement to supply Drakes Supermarkets in Queensland for a further five years to June 2029.

At the start of May, it announced it had entered into an agreement with Australian United Retailers to supply its national network of supermarkets and convenience stores, including its FoodWorks bannered supermarkets, for a further five-year period, starting July 2022. Sales to FoodWorks in FY21 accounted for around $900 million of the total $9.4 billion Metcash food sales.

It’s currently rated as a buy by the broker UBS with a price target of $5. The broker is expecting Metcash to pay a grossed-up dividend yield of 6% in FY22 and 6.3% in FY23.

Motley Fool contributor Tristan Harrison 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 no position in any of the stocks mentioned. 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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