Investors looking for high levels of investment income will want to know about the two ASX dividend shares in this article picked as buys by brokers.
There are plenty of companies on the ASX that pay dividends. However, there aren't too many that are expected to pay big dividend yields at the current prices.
From the shortlist of shares predicted to pay large yields, experts think only a few are actually worth buying due to being good value.
Let's have a look at two of those buy-rated names.
MotorCycle Holdings Ltd (ASX: MTO)
This is an interesting, small-cap ASX share. As the name implies, it's all about motorcycles. It has motorcycle dealerships selling both new and used motorcycles.
The broker Morgans currently rates the business as a buy with a price target of $3.23. This implies a rise of more than 30% over the next year, if the broker is right.
Morgans thinks the ASX dividend share's profit will drop slightly in FY23. The broker estimates that MotorCycle Holdings is valued at 7.5 times FY23's estimated earnings.
In other words, the broker thinks it looks cheap after a 20% drop in the MotorCycle Holdings share price drop in 2022.
For FY22, management said it expects to maintain current strong margins and have tight control of overheads. It's continuing to actively pursue potential dealership acquisition opportunities. The business said it's continuing organic growth with a broadening product offering in both retail and wholesale networks.
The targeted dividend payout ratio is between 50% and 70% of net profit after tax (NPAT). Morgans thinks MotorCycle Holdings will offer a grossed-up dividend yield of 11.3%.
New Hope Corporation Limited (ASX: NHC)
New Hope is a leading Australian coal miner.
It recently expanded its portfolio with a $94.4 million investment for a 15% interest in Malabar Resources – the flagship asset is the Maxwell mine, an underground metallurgical coal project located 10km southwest of Muswellbrook in the Hunter Valley. Construction of the project commenced in May 2022.
The Maxwell mine has an estimated life of at least 25 years, with more than 75% of the product suitable for steelmaking.
The miner is rated as a buy by the broker Credit Suisse, with a price target of $4.90. The broker expects the ASX dividend share to pay a grossed-up dividend yield of 34% in FY23.
New Hope said that while wet weather has impacted the business, it's benefitting from the strengthening coal price.
According to Credit Suisse, the New Hope share price is valued at under 3 times FY23's estimated earnings.
