If the latest monthly CPI data is anything to go by, rising inflation is still proving stubbornly difficult to quash. As a result, many Aussies are really starting to feel the pinch of surging prices across life's everyday essentials.
Yes, wages have also been climbing. But for most of those fortunate enough to have received a boost to their take-home pay, this has generally been eradicated (and then some!) by the need to shell out more at the checkout.
So, what's the solution? Start a side hustle? Take a second job? Hit up the boss for a pay rise?
If you're looking for a slightly less labour-intensive way to boost your income, ASX dividend shares could be the answer. Unlike investment properties, which can take considerable time and effort to maintain, dividend stocks have the potential to provide a truly passive income stream.
So sit back and relax! Because we asked our Foolish contributors which ASX dividend shares they reckon are worth buying with your hard-earned cash right now. Here's what the team came up with:
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5 best ASX dividend shares for January 2023 (smallest to largest)
Universal Store Holdings Ltd (ASX: UNI), $394.34 million
Vanguard Australian Shares High Yield ETF (ASX: VHY), $2.68 billion
Sonic Healthcare Limited (ASX: SHL), $14.65 billion
ANZ Group Holdings Ltd (ASX: ANZ), $71.24 billion
Westpac Banking Corp (ASX: WBC), $82.15 billion
(Market capitalisations as at market close on 11 January 2023)
Why our Foolish writers love these ASX dividend shares
Universal Store Holdings Ltd
What it does: Universal is a retailer of clothing and accessories aimed at dressing Australia's youth. The company operates 80 stores across Australia, as well as two separately-branded online stores, and its newly acquired Thrills brand.
By Brooke Cooper: The Universal Store share price was hit hard, alongside those of many retailers, in 2022. The stock fell 25% over the 12 months ended 31 December.
However, as Goldman Sachs notes, the economic headwinds that spurred much of the downturn among ASX consumer dictionary shares are unlikely to majorly impact Universal's target market. Thus, I believe the stock's struggles may have brought about a buying opportunity.
Universal Store shares have paid 21.5 cents of dividends over the last 12 months and are currently trading at $5.14. That leaves the stock boasting a 4.17% dividend yield.
Motley Fool contributor Brooke Cooper does not own shares of Universal Store Holdings Ltd.
Vanguard Australian Shares High Yield ETF
What it does: The Vanguard Australian Shares High Yield ETF is an exchange-traded fund (ETF) that invests in a basket of ASX-listed dividend-paying shares.
By Sebastian Bowen: This ETF from reputable provider Vanguard aims to provide investors with high levels of dividend income and franking credits. It holds a relatively concentrated basket of only ASX dividend shares.
These mostly consist of the blue-chip shares income investors know and love, spread across different industries. They include banking and finance, mining, energy, infrastructure, and consumer staples.
As such, this investment could well be worth considering for income investors in 2023 who are seeking a diversified, income-producing investment in one single and simple fund.
This ETF also pays out dividend distributions quarterly, which some investors might appreciate. On recent pricing, the Vanguard Australian Shares High Yield ETF offered a trailing distribution yield of more than 6%.
Motley Fool contributor Sebastian Bowen does not own units of the Vanguard Australian Shares High Yield ETF.
Sonic Healthcare Limited
What it does: Sonic is a global pathology healthcare business that operates in a number of countries including Australia, the USA, Germany, the UK, and Switzerland.
By Tristan Harrison: Sonic Healthcare has a stated progressive dividend policy. It has increased its dividend every year for a decade.
According to Commsec, the company is expected to pay an annual dividend per share of $1.04 in FY24. This translates to a forward, grossed-up dividend yield of almost 5%.
Sonic management points to "strong underlying industry drivers and market share" with a backlog of testing postponed during the pandemic. This implies solid, non-COVID testing revenue growth over the short-to-medium term.
I like the company's recent acquisitions, including the 19.9% stake it bought in Microba Pty Ltd (ASX: MAP). I believe this is a good use of the company's COVID-testing cash flow and can help grow its profit and dividend in future years.
Motley Fool contributor Tristan Harrison does not own shares of Sonic Healthcare Limited.
ANZ Group Holdings Ltd
What it does: ANZ is the smallest of the big four Australian banks, servicing both Australia and New Zealand across its retail, commercial, and institutional divisions. As of September 2022, the bank held $283.1 billion worth of Australian home loans on its balance sheet.
By Mitchell Lawler: The market appears to be discounting ANZ shares compared to its peers. Right now, big blue is trading at roughly 10 times earnings.
In comparison, the rest of the banking giants fetch 14 to 19 multiples. Perhaps investors aren't keen on the bank's expenses chewing up 45% of its revenue – the highest of the big four.
However, I'm of the opinion the proposed merger between ANZ and Suncorp Group Ltd (ASX: SUN) will go through… eventually. The mergers of the past – Commonwealth Bank of Australia (ASX: CBA) and Bankwest, Westpac and St. George – have set precedents that will be hard for the ACCC to argue against.
A merger of ANZ and Suncorp would help create business simplification and improved pricing power. I believe this would provide justification for ANZ shares to trade more in line with the industry average.
In my opinion, ANZ shares offer an attractive blend of income (6.14% yield currently) and potential share price growth.
Motley Fool contributor Mitchell Lawler does not own shares of ANZ Group Holdings Ltd but does own shares of Commonwealth Bank of Australia.
Westpac Banking Corp
What it does: Westpac is one of Australia's big four banks. As well as the eponymous Westpac brand, it operates the Bank SA, Bank of Melbourne, Rams, and St George brands.
By James Mickleboro: I think Westpac could be a top dividend option in January. Thanks to the positive impact of rising interest rates on margins and the bank's bold cost-reduction target, I feel that Australia's oldest bank is well-placed to deliver solid earnings and dividend growth in the coming years.
I'm not alone in this view. Goldman Sachs is forecasting fully-franked dividends per share of $1.48 in FY 2023, $1.59 in FY 2024, and $1.69 in FY 2025. This represents yields of 6.3%, 6.8%, and 7.2%, respectively, based on the current share price. Goldman also sees plenty of upside with its conviction buy rating and $27.60 price target.
Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corp.
