The Australian share market index is home to a large number of companies that reward their shareholders with dividends each year.
Two highly rated dividend shares that offer investors good yields right now are listed below. Here's why they have been tipped as buys:
Rural Funds Group (ASX: RFF)
The first ASX dividend share to look at is Rural Funds. It is an Australian agricultural property company with a portfolio of high quality assets.
Thanks to long leases and periodic rental increases, the company has been increasing its dividend at a solid rate for many years. This saw Rural Funds lift its distribution by its annual target rate of 4% in FY 2022 to 11.73 cents per share.
This and recent share price weakness has caught the eye of analysts at Bell Potter. The broker recently upgraded its shares to a buy rating with a $2.75 price target on valuation grounds. It notes that "the current discount to adjusted NAV reflects what historically would be considered an attractive entry point."
Another reason for the broker's positive view is its belief that Rural Funds will continue to pay generous dividends in the coming years. For example, it is forecasting an 11.7 cents per share dividend in FY 2023 and then a 12.7 cents per share dividend in FY 2024. Based on the current Rural Funds share price of $2.46, this represents yields of 4.8% and 5.15%, respectively.
Wesfarmers Ltd (ASX: WES)
Another ASX dividend that has been tipped as a buy is Wesfarmers.
It is the conglomerate behind a growing portfolio of high quality businesses. These include Coregas, Covant Lithium, Kmart, Officework, Priceline, and, the jewel in the crown, Bunnings.
The team at Morgans is very positive on its outlook thanks to its "quality retail portfolio" and "highly regarded management team." As a result, the broker has put an add rating and $55.60 price target on its shares.
As for dividends, Morgans is forecasting fully franked dividends per share of $1.82 in FY 2023 and $1.89 in FY 2024. Based on the current Wesfarmers share price of $43.29, this will mean yields of 4.2% and 4.4%, respectively.
