Why does Morgans rate these ASX dividend stocks as buys?

The broker thinks highly of these shares. But why?

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Which ASX dividend stocks could be buys in March? Let's see what the team at Morgans is saying about the two listed below.

Here's what its analysts are saying about these stocks:

Bapcor Ltd (ASX: BAP)

This auto parts retailer could be an ASX dividend stock to buy according to Morgans. The broker has an add rating and $6.60 price target on its shares.

Although Morgans acknowledges that a change of management and strategy creates a bit of uncertainty, it believes this has been built into its current valuation. Morgans commented:

Despite the uncertainty tied to an inevitable strategy review, we continue to see higher earnings in FY25 as realistic. We acknowledge the BAP investment case is tricky until the new CEO provides some strategy clarity. However, despite incurring mgmt and strategy change and a difficult cost environment, the business has been resilient. We think the valuation point continues to provide value on a medium-term view.

In respect to dividends, the broker is forecasting the company to pay 19.5 cents per share in FY 2024 and 23 cents per share in FY 2025. Based on the current Bapcor share price of $6.06, this implies dividend yields of 3.2% and 3.8%, respectively.

Super Retail Group Ltd (ASX: SUL)

Another ASX dividend stock that has been given the thumbs up by analysts at Morgans is Super Retail. The broker has an add rating and $17.50 price target on the shares of the owner of BCF, Supercheap Auto, Macpac, and Rebel.

Morgans has been impressed with the company's performance, noting that it is outperforming rivals. It said:

In our opinion, the business is outperforming the competition across most of its retail operations as it leverages its brand equity, strong omnichannel credentials, well subscribed loyalty programmes and extensive network of stores. PBT was down only (5)% compared, for example, with JB Hi-Fi's (20)% decline. Although there is some work to do at rebel, in particular, we believe SUL will continue to deliver strong returns and remains likely to declare a special dividend in August.

As for income, Morgans expects fully franked dividends per share of 96 cents in FY 2024 and 74 cents in FY 2025. Based on its current share price of $14.70, this will mean yields of 6.5% and 5%, respectively.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 positions in and has recommended Super Retail Group. The Motley Fool Australia has recommended Bapcor. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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