If you're looking for a passive income boost, then you may want to check out the ASX dividend shares listed below.
Goldman Sachs has tipped these ASX shares to pay their shareholders big dividends this year and next. Here's what you need to know about them:
Rio Tinto Ltd (ASX: RIO)
If you're not averse to investing in the mining sector, then Goldman thinks Rio Tinto could be a great ASX dividend share to buy.
The broker believes the mining giant's shares are good value compared to rivals. Particularly given its production growth, free cash flow improvement potential, and its high-quality aluminium business. It commented:
We are Buy rated on RIO and add to the CL due to: (1) compelling relative valuation vs. peers (0.9xNAV vs. BHP 1.05xNAV and FMG 1.5xNAV), (2) strong FCF and Div yield with our bullish view on iron ore, aluminium and copper prices, (3) strong production growth from iron ore and copper (+8% Cu Eq terms in 2023E, +5% in 2024E), (4) the potential for FCF/t improvement in the Pilbara in 2023 with Guida-darri and over the medium to long run driven by Rhodes Ridge, and (5) World's highest margin low emission aluminium business.
Its analysts are forecasting fully franked dividends per share of US$5.33 in FY 2023 and then US$5.98 in FY 2024. Based on current exchange rates and the latest Rio Tinto share price of $116.31, this will mean yields of 6.9% and 7.8%, respectively.
Goldman Sachs has a buy rating and $140.40 price target on its shares.
Universal Store Holdings Ltd (ASX: UNI)
If you would prefer not to invest in the mining sector, then this youth fashion retailer could be the ASX dividend share for you.
Goldman Sachs believes Universal Store is a great option due to its expansion opportunities and exposure to younger consumers. The broker expects the latter to continue spending as normal thanks to minimum wage increases and their lower exposure to rising interest rates. It explained:
We believe the young Australian consumer is uniquely resilient to inflationary and broader economic pressures given (1) a high proportion live at home; (2) more than two-thirds are working; (3) high and increasing minimum wage entitlements and; (4) a heavy skew towards discretionary spending.
In respect to dividends, the broker is forecasting fully franked dividends of 27 cents in FY 2023 and 34 cents in FY 2024. Based on the latest Universal Store share price of $5.10, this equates to yields of 5.3% and 6.65%, respectively.
Goldman Sachs currently has a buy rating and $8.05 price target on its shares.
