If you're in the market for some ASX dividend shares, then you might want to check out the two listed below.
These ASX dividend shares are on Morgans' best ideas list for the month of March. Here's why it rates them highly:
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Telstra Corporation Ltd (ASX: TLS)
Telstra is on the broker's best ideas list again in March with an add rating and price target of $4.70.
Morgans is very positive on the company due to the success of its turnaround and its recent restructure. It believes the latter could unlock value from asset divestments. It explained:
After a major turnaround, TLS has emerged in good shape with strong earnings momentum and a strong balance sheet. In late CY22 shareholders vote on Telstra's legal restructure, which opens the door for value to be released. TLS currently trades on ~7x EV/EBITDA. However some of TLS's high quality long life assets like InfraCo are worth substantially more, in our view. We don't think this is in the price so see it as value generating for TLS shareholders. This, free option, combined with likely reputational damage to its closest peer, following a major cybersecurity incident, means TLS looks well placed for the year ahead.
As for dividends, the broker is forecasting fully franked dividends of 17 cents per share in FY 2023 and FY 2024. Based on the current Telstra share price of $4.12, this will mean yields of 4.1%.
Transurban Group (ASX: TCL)
Toll road operator Transurban could be another ASX dividend share to consider. Morgans has it on its best ideas list with a $14.21 price target.
Its analysts believe the company is an attractive option for investors given the quality of its assets and growth potential. The broker explained:
TCL owns a pure play portfolio of toll road concession assets located in Melbourne, Sydney, Brisbane, and North America. This provides exposure to regional population and employment growth and urbanisation. Given very high EBITDA margins, earnings are driven by traffic growth (with recovery from COVID) and toll escalation (roughly 70% by at least CPI and approximately one-quarter at a fixed c.4.25% pa). We think TCL will continue to be attractive to investors given its market cap weighting (important for passive index tracking flows), the high quality of its assets, management team, balance sheet, and growth prospects.
Morgans is forecasting dividends per share of 57 cents in FY 2023 and then 64.5 cents in FY 2024. Based on the current Transurban share price of $14.24, this will mean yields of 4% and 4.5%, respectively.
