Looking for reliable ASX dividend shares to add to your portfolio? Who isn't! Trouble is where to start in this open minefield.
After running the numbers this past month, two top investment picks stand out to me in particular: Endeavour Group Ltd (ASX: EDV) and BHP Group Ltd (ASX: BHP).
Both offer attractive yields and are highly rated by experts. Let's break down why these companies might be worth a look.
ASX dividend shares for FY25
As far as ASX dividend shares go, Endeavour Group has not been front and centre of the investment class for me.
But after looking at the numbers, the pro-Endeavour debate starts to make sense.
As the operator of Dan Murphy's, BWS, and more than 350 ALH Hotels across Australia, Endeavour has cemented its position in the Australian alcohol retail market.
Goldman Sachs is bullish on the ASX dividend share, citing its market strength and exposure to a category less impacted by economic cycles (beverages).
Per Euromonitor, Australia's per cap consumption of alcohol is already one of the highest in the world in both volume/value terms.
That said, industry growth has been relatively stable, averaging 10-yr CAGR of ~2.6% from 2009-2019, and pushing higher into 5.8% 2019-2023 CAGR largely due to inflation…[we are] positive mix/price have driven industry growth.
The broker anticipates fully franked dividends of 20 cents per share in FY25 and 22 cents per share in FY26.
This translates to forward yields of 4.6% and 5%, respectively, at the closing share price on Friday.
Additionally, with a $5.50 price target, Goldman forecasts a potential upside of 26% over the next 12 months. So, factoring in potential growth in both the capital and income accounts, total returns could surpass 30% if they prove true.
BHP top of the mantlepiece
Unlike Endeavour, BHP does come to mind when thinking of top ASX dividend shares. The Aussie king of dividends, it has featured prominently among the world's top dividend-paying companies for many years but was absent from September's list.
Nevertheless, keen observers of high-quality businesses will always be attracted to a combination of income and growth — both of which BHP has to offer, in my view.
As one of the largest mining companies globally, the ASX dividend share has focused on copper and iron ore, which are critical to the global energy transition.
Goldman Sachs is particularly positive on BHP's copper operations in Chile, noting the company's plans to invest up to US$14.8 billion in expanding production.
It projects fully franked dividends of US$0.99 per share in FY25 and US$1.07 in FY26.
These yields come to 3.8% and 4%, respectively, at current levels.
It also values the business at $47.30 per share, another 18% upside. If correct, the total shareholder return could be more than 20% in the next year.
Foolish takeaway
According to Goldman Sachs, these ASX dividend shares offer attractive dividend yields and solid growth prospects, making them strong candidates for any income-focused portfolio.
Add in the prospects for capital gains, and you've got the makings of a tasty investment pie that can rest on the shelf for many, many years to come.
