Looking for ASX dividend shares for your income portfolio? Then look no further.
The team at Bell Potter has two named two quality shares on its Australian equities panel this month.
These are shares that it believes offer attractive risk-adjusted returns over the long term. The broker also notes that it focuses on quality companies with proven track records, strong management teams, and competitive advantages.
Two ASX dividend shares that tick these boxes for the broker are listed below. Here's what it is saying about them:
Coles Group Ltd (ASX: COL)
The first ASX dividend share that the broker is positive on its supermarket giant Coles.
It believes that Coles' outlook is looking positive. This is due to moderating costs, higher immigrations, and the modernisation of its supply chain. It explains:
Coles Group is a diversified company with operations in food, liquor, petrol retailing and financial services. Coles also retains a 50% ownership interest in Flybuys. Costs are expected to remain elevated but should moderate through FY24 and FY25 as general inflation tapers off. In the medium term, 1) higher immigration should support grocery spending, and 2) Coles is entering a period of elevated capex intensity as it reinvests to modernise its supply chain and to catch up to competitors on online and digital offerings, which should help Coles maintain its market position.
Bell Potter estimates that Coles will provide a 3.8% dividend yield over the next 12 months.
Worley Ltd (ASX: WOR)
A second ASX dividend share that the broker is bullish on is Worley. It is an engineering and professional services company that provides consulting and project delivery expertise to the resources and energy sectors.
Bell Potter believes the company is well placed to benefit from spending in the energy sector and high margin sustainability-related projects. It explains:
Worley is a global leader in engineering services, which is poised to benefit from the growing capital investments in the energy sector. The company is well positioned for growth, driven by both traditional (oil and gas) and sustainable energy projects. While traditional projects currently account for half of WOR's revenue, the company is actively transitioning towards higher-margin sustainability-related projects, solidifying its position as a global leader in this space.
It also feels that its shares are undervalued at current levels. It adds:
This strategic shift not only ensures near-term gains from the ongoing oil and gas reinvestment cycle but also secures long-term structural growth from the energy transition. Despite a strong earnings growth outlook, WOR's valuation has derated significantly. Currently trading at a forward PE multiple of ~15x, we think there is upside risk to the growth outlook in the medium term.
Bell Potter is forecasting 3.6% dividend yield over the next 12 months.
