Fortescue Ltd (ASX: FMG) shares have been a popular option for income investors in recent years.
However, with analysts predicting big dividend cuts in the future and some declaring its shares as vastly overvalued, it may not be the best option right now.
But which ASX dividend stocks should you buy instead? Let's look at two alternatives that analysts are bullish on right now:
Endeavour Group Ltd (ASX: EDV)
Goldman Sachs thinks that Endeavour Group could be an ASX dividend stock to buy.
Endeavour Group is the leader in the Australian alcohol retail market and the name behind Dan Murphy's and BWS. It also owns ALH Hotels, which has over 350 licensed venues in Australian capital cities and regional centres.
Goldman Sachs likes the company due to its market leadership position and the defensive nature of the alcohol retail market. It recent said:
Our Buy thesis on the stock is based on the following key drivers: 1) Market share gain (already 40% market share) in defensive alcohol retail from consumer data and loyalty advantages; 2) Organic reopening beneficiary with its hotels/pubs business back to pre-COVID sales/property. We believe EDV is trading at a relatively attractive valuation, with potential downside from EGM tax changes already fully priced in.
As for income, the broker is forecasting fully franked dividends of 22 cents per share in FY 2025 and then 24 cents per share in FY 2026. Based on the current Endeavour share price of $4.84, this will mean dividend yields of 4.5% and 5%, respectively.
Goldman has a buy rating and $6.20 price target on its shares.
Regal Partners Ltd (ASX: RPL)
Bell Potter is tipping this alternative investment company as an ASX dividend stock to buy right now.
It believes the company's shares are cheap given its strong investment performance and positive outlook. It said:
It has continued to show value creation in CY24 with fund inflows, new fund launches, strong performance (which is expected to translate into high performance fees), and recently another acquisition. It is to acquire 100% of Merricks, a leading alternative investment manager focused on private credit investments across commercial real estate, agriculture, and other assets with $2.9bn of FUM.
This acquisition will add to FUM, is enhancing to EPS, but does not create an immediate overhang of stock. This latest acquisition further highlights the entrepreneurial culture, illustrated by the expansion through M&A and its growth through the launch of new strategies. It is also highly profitable earning high management fees and performance fees. We feel this strong performance is not reflected in the share price and see considerable upside.
The broker expects some great dividend yields in the near term. It is forecasting fully franked dividends per share of 16.3 cents in FY 2024 and then 18.1 cents in FY 2025. Based on its current share price of $3.89, this represents dividend yields of 4.2% and 4.7%, respectively.
The broker has a buy rating and $4.85 price target on its shares.
