There are lots of good options for income investors on the Australian share market. But which ASX dividend stocks could be in the buy zone now?
Two that analysts are tipping as buys for an income boost are listed below. Here's what they are saying about them:
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Dexus Convenience Retail REIT (ASX: DXC)
The first ASX dividend stock to look at is the Dexus Convenience Retail REIT.
It owns a high quality portfolio of Australian service stations and convenience retail assets that are predominantly located on Australia's eastern seaboard. They are leased to leading Australian and international convenience retail tenants with a long lease expiry profile and contracted annual rent increases. This delivers the fund a sustainable and strong level of income security.
Bell Potter is positive about the company and feels the market is undervaluing its shares. It said:
DXC is one of our preferred ways to play externally managed REITs given its high distribution yield (+7%), but with valuation confidence, yet the stock trading at a c.21% discount to NTA despite c.10% of the portfolio having been recycling in the last 12m, and price discovery only as recent as this month for the majority, we see a low-risk double digit total return opportunity where other REITs are likely to still be cycling either cap rate expansion and/or earnings downside. With strong price discovery, and operator reinvestment into the sector we see a positive outlook ahead for DXC.
Bell Potter expects this to support the payment of dividends per share of 20.6 cents in FY 2025 and then 21 cents in FY 2026. Based on its current share price of $2.90, this implies dividend yields of 7.1% and 7.25%, respectively.
The broker has a buy rating and $3.10 price target on its shares.
Hotel Property Investments Ltd (ASX: HPI)
The team at Morgans thinks that Hotel Property Investments could be an ASX dividend stock to buy.
It is the owner of a portfolio of freehold hotels and associated specialty tenancies located throughout Australia.
Morgans was pleased with its performance in FY 2024 and appears to believe it is well-placed for the future. It said:
The FY24 result was in line with expectations. Proceeds from asset sales are being used to pay down debt as well as recycle into the ongoing capex program with its key tenant which is being rentalised at 7.5%. NTA stable at $4.01 with rental growth offsetting cap rate expansion. We maintain our ADD rating.
The broker expects this to underpin dividends per share of 19.5 cents in FY 2025 and then 20 cents in FY 2026. Based on its current share price of $3.47, this will mean dividend yields of 5.6% and 5.75%, respectively.
Morgans has an add rating and $3.69 price target on its shares.
