Morgans names the best ASX 200 dividend shares to buy in May

Morgans believes that these ASX dividend shares tick a lot of boxes for income investors.

The good news for income investors is that there are a large number of quality ASX 200 dividend shares to choose from on the Australian share market.

Two that have been tipped as best buys by analysts at Morgans in May are listed below. Here's what the broker is saying about them:

an older couple look happy as they sit at a laptop computer in their home.

Image source: Getty Images

QBE Insurance Group Ltd (ASX: QBE)

The first ASX 200 dividend share that Morgans has on its best ideas list is insurance giant. The broker currently has an add rating and $16.96 price target on its shares.

It believes QBE is attractively priced, particularly given how rate increases are still flowing through its insurance book. In addition, the broker highlights its cost reductions plans and strong balance sheet as reasons to be positive. It explained:

With strong rate increases still flowing through QBE's insurance book, and further cost-out benefits to come, we expect QBE's earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on 8x FY24F PE.

Morgans is expecting this to underpin dividends per share of approximately 83 cents in FY 2023 and 94 cents in FY 2024. Based on the current QBE share price of $15.35, this will mean yields of 5.4% and 6.1%, respectively.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 dividend share that Morgans has on its best ideas list this month is banking giant Westpac. The broker has an add rating and $25.80 price target on its shares.

Its analysts are positive on Westpac due to their belief that Australia's oldest bank is well-placed to deliver the best return on equity improvement in the sector. It is expecting this to underpin some big dividend yields in the coming years. It commented:

We view WBC as having the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful. The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book. Yield including franking is attractive for income-oriented investors, while the ROE improvement should deliver share price growth.

The broker is forecasting fully franked dividends per share of $1.53 per share in FY 2023 and $1.59 per share in FY 2024. Based on the current Westpac share price of $21.35, this will mean yields of 7.15% and 7.45%, respectively.

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Woman looking at her computer and pondering something.
Dividend Investing

Insurance Australia Group vs Coles: Which ASX dividend comes out on top?

Should income investors pick Insurance Australia Group or Coles Group? Here’s how their dividends, franking, and value stack up.

Read more »

Two men in suits face off against each other in a boxing ring.
Test Only

Wesfarmers vs Woolworths: Which ASX dividend share looks better this month?

I compare Wesfarmers and Woolworths head-to-head to see which ASX dividend share is better value and income for investors right…

Read more »

A man points at a paper as he holds an alarm clock, indicating the ex-dividend date is approaching.
Dividend Investing

10 ASX shares with ex-dividend dates next week

Harvey Norman, MFF Capital Investments, WAM Capital, and other stocks go ex-div next week.

Read more »

Smiling woman listening to music and using her phone.
Dividend Investing

AGL Energy vs Wesfarmers: Which share delivers better passive income?

AGL Energy offers a bigger franked dividend yield than Wesfarmers—here's which ASX stock I'd pick for passive income.

Read more »

Hand of a woman carrying a bag of money, representing the concept of saving money or earning dividends.
Dividend Investing

2 ASX passive income share ideas I'd use to generate $300 a month in 2027

These businesses are providing incredible dividend income.

Read more »

Mining vehicle at a mine site.
Dividend Investing

If I invest $10,000 in Fortescue shares, how much passive income could I earn in FY27?

Do you hold Fortescue shares in your portfolio?

Read more »

Piles of increasing coins on Australian $100 notes.
Dividend Investing

ASX ETF dividends: Global X reveals next payments

Own A300, ZYAU, BANK, or OZXX ETFs? Here's your next dividend.

Read more »

Person handing out $100 notes, symbolising ex-dividend date.
Dividend Investing

2 great ASX dividend share buys for passive income in October

I think these investments look incredible options for dividends.

Read more »