If you are on the hunt for the best ASX dividend stocks to buy, then it could be worth listening to what Bell Potter is saying about the two in this article.
They have been named on the broker's Australian's equities panel this month. These are its favoured Australian equities that it believes offer attractive risk-adjusted returns over the long term. Here's what the broker is saying about them:
Eagers Automotive Ltd (ASX: APE)
Bell Potter thinks that investors should be buying Eagers Automotive shares. It notes that it is the dominant player in the automotive retail market in Australia, with a market share >10%.
It also highlights that this ASX dividend stock has been around for over 100 years, which it believes shows longevity, good stewardship by the board, and the ability to withstand market downturns.
Commenting on its buy recommendation, the broker said:
APE should continue to grow revenue via a mix of inorganic and organic growth. The company is also looking to drive margin expansion by buying existing dealership properties (to reduce rent), increasing penetration in finance and insurance (F&I) (higher margin) and through productivity initiatives (technology). Together, management are expecting ~200bps of margin improvement from these initiatives, which would be extremely material (pre-COVID margins of 2.9%). The company is also in a strong financial position with core net debt of around $495m and a property portfolio worth around $727m as at 30 June 2024.
As for dividends, its analysts are forecasting fully franked dividends of 66.5 cents in FY 2024 and then 73 cents in FY 2025. Based on the current share price of $11.45, this will mean dividend yields of 5.8% and 6.4%, respectively.
Bell Potter has a buy rating and $13.00 price target on its shares.
Premier Investments Ltd (ASX: PMV)
Another ASX dividend stock that could be one of the best to buy right now according to Bell Potter is Premier Investments.
It is the owner of the Peter Alexander and Smiggle brands, which the broker believes have long growth runways. It is also positive on the proposed divestment of its non-core brands. It said:
In addition to Premier Investment's market share of ~6% in the apparel vertical and ~15% in the stationary space in Australia, the Smiggle brand is also a large player in the UK market. As the Smiggle brand looks to grow its presence in the Middle East & Indonesia via a low-risk wholesale model and Peter Alexander into the UK, we think the two brands have a long runway ahead.
With the divestment of the non-core Apparel Brands to Myer (MYR) in an all-script deal expected to be completed in January 2025, we see PMV retaining the higher margin Smiggle and Peter Alexander earnings base post-demerger. We view the highly profitable retail business with domestic:offshore exposure of 70:30 (BPe) growing at ~13% (BPe, FY26e), ~26% stake in Breville Group (BRG), together with property assets valued at cost and a strong cash balance (~$327m, BPe), as worthy of a re-rate in the multiple.
Bell Potter is forecasting fully franked dividends per share of 111.7 cents in FY 2025 and then 122.6 cents in FY 2026. Based on the current Premier Investments share price of $32.17, this equates to dividend yields of 3.5% and 3.8%, respectively.
The broker has a buy rating and $38.00 price target on its shares.
