2 ASX dividend shares with HUGE yields that experts rate as buys

These buy-rated ASX dividend shares are expected to pay big dividends.

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Key points

  • Experts rate both of these ASX dividend shares as buys, while expecting them to pay large yields
  • GQG Partners is a fund manager which has been experiencing large fund inflows
  • Nick Scali is one Australia’s leading furniture retailers

Experts have chosen some ASX dividend shares to rate as buys, which are expected to pay very large dividends to investors.

Companies aren’t rated as buys just because they are expected to pay large dividends. If the analyst thinks the valuation is good then it will be rated as a buy.

A combination of a large dividend and share price rises could be attractive.

GQG Partners Inc (ASX: GQG)

GQG Partners is a large fund manager which is based in the US but is listed in Australia.

The fund manager is rated as a buy by the broker Morgans. The price target is $2.15, which suggests a possible upside of around 34% on today’s closing price of $1.60.

Morgans thinks the current volatility that markets are seeing could be a short-term headwind. However, it’s the broker’s pick in the sector because of the ongoing fund inflows.

According to Morgans, GQG is going to pay a dividend yield of 7.4% in FY22 and 8% in FY23.

The company is committed to paying a high dividend payout ratio. It recently declared a quarterly dividend that represented approximately 90% of the company’s estimated first-quarter distributable earnings.

In its latest quarterly update, it said for the three months to March 2022, it experienced net inflows of US$3.4 billion despite “an extremely challenging macro environment”.

The ASX dividend share has commented that it’s seeing business momentum across multiple geographies and channels, including in the Australian and Canadian retail channels.

Nick Scali Limited (ASX: NCK)

Nick Scali is an ASX dividend share that operates both Nick Scali stores and Plush Think-Sofas after an acquisition.

The business is rated as a buy by the broker Macquarie, with a price target of $12.70. That implies a potential upside of more than 40% from Thursday’s closing price of $8.79.

In terms of the potential dividends, Macquarie has predicted that Nick Scali is going to pay a grossed-up dividend yield of 8.8% in FY22 and 8.1% in FY23. The broker thinks that Nick Scali can continue to perform with its elevated order book. It’s expected to revert back to a more normal level.

The company recently gave an update to the market to show it’s planning to grow its total store network from 108 to 186 over the long term. It’s going to grow the Plush business, increase its online sales, potentially make more acquisitions, and try to increase profit margins.

The ASX dividend share sees an opportunity to grow Plush’s gross profit margin from the pre-integration historical range of 50% to 52%, up to a margin of at least 60% by widening the price range of products, leveraging the existing Nick Scali supplier base and delivery network, and other tactics.

In the FY22 second half to 30 April 2022, Nick Scali said it had seen total written sales growth of 36.5% year on year including Plush. Excluding Plush, written sales orders were in line with the prior corresponding period.

The outstanding order bank at the end of April remained “elevated”, up almost 90% on the previous year.

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 recommended Macquarie Group Limited. 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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