Forget Westpac and buy these ASX dividend stocks

Analysts think these income stocks would be good alternatives for investors.

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If you want some income options outside the status quo of Commonwealth Bank of Australia (ASX: CBA) or Westpac Banking Corp (ASX: WBC), then it could be worth looking at the two ASX dividend stocks listed below.

Here's why brokers think they could be in the buy zone today:

South32 Ltd (ASX: S32)

If you don't mind investing in the mining sector, then South32 could be an ASX dividend stock to buy right now.

That's the view of analysts at Goldman Sachs, which believe that the diversified miner is undervalued. This is due largely to the favourable outlook for copper, aluminium, zinc, and met coal prices. It explains:

GS are bullish copper, aluminium, zinc and met coal (~65% of S32 NTM EBITDA) in CY24. Together with lower capex, working cap unwind and higher production, we forecast ~US$550mn of FCF in the June H. On our forecasts, S32 is trading on a FCF yield of 9% in FY25 (10% at spot). […] Attractive valuation: although trading at ~1xNAV (A$3.77/sh), on near term multiples S32 is trading on an attractive NTM EV/EBITDA multiple of ~4.5x vs. the global sector average of 5.7x.

Goldman also believes that the South32 dividend is about to jump. It is forecasting fully franked dividends per share of 4 US cents in FY 2024, then 12 US cents in FY 2025 and 18 US cents in FY 2026. Based on its latest share price of $3.64 and current exchange rates, this will mean dividend yields of 1.7%, 4.9%, and 7.3%, respectively.

Goldman has a buy rating and $4.30 price target on South32's shares.

SRG Global Ltd (ASX: SRG)

Bell Potter thinks that SRG Global could be a top ASX dividend stock to buy this month. It has a buy rating and $1.30 price target on its shares.

SRG Global is a diversified industrial services group that provides multidisciplinary construction, maintenance, production drilling and geotechnical services.

Bell Potter is positive on the company due to its belief that SRG Global will be a big winner from construction activity and accelerating growth in iron ore and gold production volumes. It explains:

SRG's short-to-medium term outlook is reinforced by Government-stimulated construction activity in the Infrastructure and Non-Residential sectors and increased development and sustaining capital expenditures in the Resources industry. The resulting expansion in infrastructure bases across these sectors will likely support increased demand for asset care and maintenance in the medium to long-term. We anticipate Mining Services will be a beneficiary of accelerating growth in iron ore and gold production volumes over the next five years.

In respect to income, Bell Potter is forecasting fully franked dividends of 4.7 cents in FY 2024 and then 6.7 cents in FY 2025. Based on its current share price of 89 cents, this will mean dividend yields of 5.3% and 7.5%, respectively.

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has recommended Srg Global. 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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