When it comes to dividend yields, income investors don't have to settle for average if they don't want to.
That's because there are a number of ASX dividend shares that are forecast to offer larger than average yields in the near term.
Two cheap-looking ASX dividend shares with big yields and buy ratings from brokers are listed below. Here's why they could be worth considering:
South32 Ltd (ASX: S32)
Goldman Sachs is expecting some particularly big dividend yields from this ASX 200 mining share in the near term.
It also sees plenty of value in its shares based on its discount to net asset value (NAV). In fact, when Goldman upgraded South32's shares to a buy rating recently, its shares were trading at ~0.95x NAV. Since then, its shares have pulled back further to $3.88 and are now trading closer to 0.85x NAV.
The good news is that as well as getting a better entry price, this weakness boosts the potential dividend yields on offer with South32's shares. Goldman was forecasting a yield of 5% in FY 2023 and then 14% in FY 2024 before its decline, so these potential yields have lifted accordingly. It commented:
We upgrade S32 to Buy (from Neutral) on attractive valuation: Trading at ~0.95xNAV (A$4.6/sh) and on an implied TSR of ~29%, and an attractive NTM EV/EBITDA multiple of ~2.1x vs. the sector average of 4.5x. We assume the share buyback continues (at ~US$250mn p.a) and S32 pays out 50% of earnings (40% ordinary, 10% special dividend component) with the FY23 full year result. On our estimates, S32 is on a supportive dividend yield of c. 5% in FY23, increasing to 14% in FY24.
Super Retail Group Ltd (ASX: SUL)
Super Retail could be an ASX dividend share to buy according to analysts at Citi.
It is a retail group primarily involved in the sale of auto parts and accessories, sports equipment and apparel, and outdoor adventure products through the Super Cheap Auto, Macpac, and Rebel brands.
Like most ASX retail shares, the Super Retail share price has been hammered recently following the release of some poor trading updates from peers. Citi appears to see this as a buying opportunity, particularly given the low cyclicality of the company's categories. As a result, it has just reiterated its buy rating with a $14.50 price target.
In addition, the broker continues to forecast big dividend yields in the near term. It is expecting fully franked dividends per share of 77 cents in FY 2023 and 72 cents in FY 2024. Based on the latest Super Retail share price of $11.70, this will mean yields of 6.6% and 6.15%, respectively. Citi commented:
Overall, we think Super Retail is in a very solid position to manage the slowdown in the consumer environment given its excellent market positions in Auto and Sports and relatively low cyclicality of these categories. We are Buy rated on SUL with a $14.50 Target Price.
