Income investors have a lot of options on the Australian share market. But which ASX dividend shares could be buys in August?
Let's take a look at two that could be quality picks according to brokers:
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Rural Funds Group (ASX: RFF)
Bell Potter continues to see this agricultural property company as an ASX dividend share to buy.
It notes that its shares trade at a significant (and undeserved) discount to their net asset value (NAV) and thinks now is the time to buy. The broker has a buy rating and $2.40 price target on them. It said:
RFF trades at a material >30% discount to its market NAV ($3.09pu) and while this is in general a theme with ASX listed farming and water assets, the discount that RFF is trading appears excessive and historically high. In effect we are seeing the market imply a depression type correction in agricultural asset values and with this in mind we are seeing a value opportunity in RFF. While the timing of that value discount closing is difficult to call, investors are likely to be rewarded with a ~6% yield to hold the position until such a time as the asset class re-rates. Interest rates peaking and divestment of non-core assets proving up NAV and releasing capital, are likely to be that catalyst.
Bell Potter is forecasting dividends per share of 11.7 cents in both FY 2024 and FY 2025. Based on its current share price of $2.04, this would mean dividend yields of 5.7% for both years.
Universal Store Holdings Ltd (ASX: UNI)
Another ASX dividend share that could be a buy next week is Universal Store. It is the youth fashion retailer behind the eponymous brand.
Morgans was impressed with the company's performance in FY 2024 and believes there's more to come in FY 2025. As a result, it has just reiterated its add rating and lifted its price target to $6.95. It said:
UNI has provided a strong trading update for FY24 with EBIT expected to be $46-47m, which is ~7% above market consensus and up 15% on FY23. We see this as a solid result amid a challenging consumer and inflationary cost environment. Sales were broadly in line with expectations, but we believe disciplined pricing and promotions will see gross margins better than expected. Tighter cost management particularly around labour rostering and greater benefits from the new DC may have assisted margins. We have increased our EBIT by 8% and 7% in FY24F and FY25F, respectively. As a result, we have increased our target price to $6.95 (from $6.50) and retain our ADD recommendation. UNI remains a key pick in Consumer Discretionary.
Morgans is forecasting fully franked dividends of 26 cents per share in FY 2024 and then 29 cents per share in FY 2025. Based on the current Universal Store share price of $5.65, this equates to dividend yields of 4.6% and 5.1%, respectively.
