Why Goldman Sachs rates these ASX dividend shares as buys

Goldman Sachs is bullish on these dividend shares…

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Fortunately for income investors, the ASX is home to a good number of shares offering attractive dividend yields.

But which ones should you buy over others? To help narrow down your options, listed below are two ASX dividend shares that Goldman Sachs rates as buys. Here's why the broker rates them highly right now:

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Accent Group Ltd (ASX: AX1)

The first ASX dividend share that has been tipped as a buy is footwear and apparel retailer Accent.

Goldman Sachs is a fan of the company and has a buy rating and $2.20 price target on its shares. The broker is bullish due to its exposure to younger consumers. It believes this leaves Accent better positioned in the current environment than many retailers. It commented:

AX1's diversified product exposure includes a number of product categories which we believe are resilient in the current cycle including youth footwear (Platypus, Hype), youth apparel (Glue, Nude Lucy), performance footwear (TAF), and a higher income consumer (Stylerunner).

As for dividends, Goldman is expecting fully franked dividends of 10.2 cents per share in FY 2023 and 11.4 cents per share in FY 2024. Based on the current Accent share price of $1.65, this will mean yields of 6.2% and 6.9%, respectively.

Adairs Ltd (ASX: ADH)

Another ASX dividend share that Goldman Sachs is bullish on is this furniture and homewares retailer.

The broker currently has a buy rating and $2.65 price target on its shares. Its analysts are positive on the company due to the belief that its core business is far more resilient than the market is giving it credit for. In light of this, Goldman believes recent share price weakness has created a buying opportunity. It explained:

We view the re-affirmed guidance [at its AGM] as a key positive for ADH, and we believe the market is pricing in EBIT that is 11-21% below the guidance range, and 12% below GSe. We view the core Adairs business as resilient in the current environment and do not believe the c.40% discount to discretionary retail peers is justified.

In respect to dividends, Goldman is forecasting fully franked dividends per share of 17 cents in FY 2023 and 20 cents in FY 2024. Based on the latest Adairs share price of $2.25, this will mean yields of 7.6% and 8.9%, 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 positions in and has recommended ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. The Motley Fool Australia has recommended Accent Group. 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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