Why this broker is bullish on these ASX dividend stocks

Bell Potter has good things to say about these stocks. Let's dig deeper into them.

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Fortunately for income investors is that there are plenty of ASX dividend stocks to choose from on the local market.

But which ones could be buys this week?

Two that analysts at Bell Potter think could be top options are listed below. Here's what they are forecasting from them:

Nickel Industries Ltd (ASX: NIC)

If you're not averse to investing in the mining sector, then Nickel Industries could be an ASX dividend stock to buy.

It is a low-cost downstream nickel miner and processor that produces nickel for the stainless steel industry and electric vehicle supply chain from its Indonesian operations.

Bell Potter has a buy rating and $1.47 price target on its shares. This implies potential upside of 60%+ from current levels.

The broker likes Nickel Industries due to their valuation and positive growth outlook. It explains:

NIC is the only pure-play producer of scale on the ASX providing exposure to the nickel price, with earnings diversified across Type 1 and Type 2 nickel. Its aggressive growth profile is fully funded, it is currently moving through the peak CAPEX phase which we forecast to drive strong earnings growth in CY25 and CY26. NIC has long-life assets with demonstrated ability to make money through the nickel price cycle while also sustaining a supportive (unfranked) dividend which we forecast to grow. At these levels it trades on undemanding valuation multiples.

In respect to dividends, the broker has pencilled in 5 cents per share dividends in both FY 2024 and FY 2025. Based on its current share price of 91 cents, this would mean dividend yields of 5.5%.

SRG Global Ltd (ASX: SRG)

Another ASX dividend stock that could be a top option according to Bell Potter is SRG Global. It is a diversified industrial services group that provides multidisciplinary construction, maintenance, production drilling and geotechnical services.

Bell Potter has a buy rating and $1.40 price target on its shares. This implies potential upside of 30% for investors from current levels.

The broker rates the company highly due largely to its belief that it will be a big winner from Government-stimulated construction activity and accelerating growth in iron ore and gold production volumes over the next five years. It said:

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.

As for income, Bell Potter is forecasting fully franked dividends of 5 cents in FY 2025 and then 6 cents in FY 2026. Based on its current share price of $1.07, this will mean dividend yields of 4.7% and 5.6%, 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 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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