In my opinion, those seeking bargain ASX shares with growth potential and dividends should look no further than IGO Ltd (ASX: IGO) and Helia Group Ltd (ASX: HLI).
Both shares currently have trailing dividend yields of 11.04% and 7.71%, respectively.
Although they are in very different domains, according to top brokers, both stocks could offer substantial growth moving forward.
Let's take a closer look.
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Bargain ASX shares with dividend growth
Along with the headwinds of the battery materials sector, IGO shares have taken a beating. They have dropped 64% in value over the past year and are trading near their 52-week lows.
At the time of publication, IGO shares trade on a price-to-earnings ratio (P/E) of 15.35 times, below the S&P/ASX 200 Index (ASX: XJO)'s current P/E of 19.03 times.
Despite this, Goldman Sachs believes the decline makes IGO a bargain ASX share, opening up a buying opportunity for investors.
Goldman said that IGO's quarterly earnings exceeded its expectations. Despite the downturn in lithium prices, IGO has managed to generate plenty of cash – cash it can use to reinvest or pay further dividends.
One of IGO's key strengths is its low-cost lithium operations at the Greenbushes mine, one of the world's largest lithium assets.
Goldman says planned expansions at Greenbushes could significantly boost production capacity. It forecasts a final payment of 7 cents per share in FY24, bringing the total payout to 18 cents.
The broker retained its buy rating on IGO, albeit with a trimmed price target of $6.75. This implies a potential upside of nearly 36% from the current trading price of $4.98 apiece.
Helia in favour
Helia Group is another bargain ASX share with upside potential according to brokers. It is currently fetching $3.76 per share.
It is priced at a P/E ratio of 4.44 times at the time of publication. In other words, investors are paying just $4.44 for every $1 of the company's earnings.
As a reminder, it is in the lender's mortgage insurance (LMI) sector.
The stock recently experienced a strong rebound, gaining nearly 15% in a single day after an upgrade from Macquarie.
Whilst it may seem large, this return came after a short-term sell-off in the days prior.
The initial sell-off in Helia shares was triggered by news that Commonwealth Bank of Australia (ASX: CBA) was tendering its LMI contract.
This contract is a significant contributor to Helia's revenue.
However, Macquarie analysts believe the LMI giant is well-positioned to retain this contract. The firm cites Helia's history of successfully winning similar tenders and the long-standing relationship between CBA.
It is a bargain ASX share, in Macquarie's opinion, which rates it at a $3.90 price target.
Meanwhile, Goldman Sachs values the share at $4.53 apiece. At the time of writing, this implies a more than 20% upside potential.
Foolish takeaway
For those doing some bottom fishing, both IGO and Helia could be bargain ASX shares, according to top brokers.
Both offer substantial growth potential of more than 20% if price targets come to fruition.
It is important to remember as well that broker opinions are just that – opinions. As always, remember to conduct your own due diligence.
