While term deposit rates have improved rapidly over the last 12 months, they still fall short of the yields offered on the Australian share market.
In addition, unlike ASX dividend shares, term deposits don't provide investors with the potential for capital gains.
With that in mind, listed below are two high-yield ASX dividend shares that could be great alternatives to term deposits. Here's why analysts rate them as buys:
Healthco Healthcare and Wellness REIT (ASX: HCW)
The first ASX dividend share that has been named as a buy is Healthco Healthcare and Wellness REIT. It is a health and wellness focused real estate investment trust with a quality portfolio of assets in high demand and boasting long leases.
Morgans was pleased with the company's performance in FY 2023 and remains positive on its outlook. It commented:
HCW's result was in line with guidance with the integration of the Healthscope portfolio transaction dominating the year. The near term focus is on third party fund raising for UHF as well as asset sales. The unlisted fund is on track to reach first close in Sep-23 and is integral to unlocking HCW's $1bn development pipeline over the medium-long term. Portfolio metrics remain stable (cash collection 100%; occupancy 99%; and WALE 12 years).
Morgans has an add rating and a $1.67 price target on its shares.
As for dividends, the broker is forecasting dividends per share of 8 cents in both FY 2024 and FY 2025. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.53, this will mean yields of 5%.
Suncorp Group Ltd (ASX: SUN)
Another ASX dividend share that could be a buy is Suncorp. It is one of Australia's leading insurance companies.
Goldman Sachs is a fan of the company. Its analysts believe it is well-positioned to benefit from favourable tailwinds. The broker commented:
We are favourably disposed to Suncorp, noting in large part the tailwinds that exist in the general insurance market – i.e., very strong renewal premium rate increases and the benefit of higher investment yields. We think the strong rate momentum that SUN is getting should likely offset volume pressures as they optimise their risk exposures in certain portfolios such as home but also likely policy lapses / buy downs.
As for dividends, the broker is forecasting fully franked dividends per share of 76 cents in FY 2024 and 81 cents in FY 2025. Based on the current Suncorp share price of $13.67, this will mean yields of 5.5% and 5.9%, respectively.
Goldman Sachs has a buy rating and a $15.13 price target on its shares.
