If you're looking for some Christmas bargains, then you may want to check out the two cheap ASX dividend shares listed below that Goldman Sachs rates as buys.
Here's why the broker thinks investors should be buying their shares:
Adairs Ltd (ASX: ADH)
The first ASX dividend share that Goldman Sachs is recommending investors buy is Adairs.
It is the leading furniture and homewares retailer behind the Adairs, Focus on Furniture, and Mocka brands.
Goldman believes that Adairs' core business is far more resilient than the market is giving it credit for. As a result, it feel its shares are trading at an unjustified discount to other retailers.
The broker commented:
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.
Goldman has a buy rating and $2.65 price target on its shares. In addition, sweetening the deal even further, its analysts are expecting some very big yields from the retailer's shares in the coming years.
It 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 $2.22, this will mean yields of 7.6% and 9%, respectively.
Elders Ltd (ASX: ELD)
Another ASX dividend share that could be cheap according to Goldman Sachs is Elders.
It is a leading agribusiness company that offers a range of services to rural and regional customers across the ANZ region.
Goldman Sachs believes that Elders' shares have unnecessarily been sold off, which could have created an excellent buying opportunity for investors given its positive outlook.
It commented:
We view the share price reaction as unwarranted. The fundamentals of this company remain unchanged, and strong in our view. […] In our view, ELD is very well positioned to grow through the cycle.
Goldman has a conviction buy rating and $18.40 price target on its shares.
As for dividends, it is expecting fully franked dividends per share of 53 cents in FY 2023 and 57 cents in FY 2024. Based on the current Elders share price of $10.27, this will mean yields of 5.15% and 5.55%, respectively.
