The interest rate cycle shifted last month and rates are now firmly on the decline according to economists.
As a result, income investors may soon find that term deposits and other fixed-income options aren't offering the same attractive returns they once did.
But don't worry because ASX dividend shares could be a great alternative, offering the potential for both income and capital growth.
Analysts are particularly bullish on the three shares listed below, all of which offer generous dividend yields. Here's why they could be great additions to an income-focused portfolio.
Accent Group Ltd (ASX: AX1)
Accent Group is a major player in the Australian footwear retail sector, owning popular brands such as HypeDC, Platypus, and The Athlete's Foot. The company has been expanding its market reach through exclusive brand partnerships and an increasing focus on vertical integration.
Analysts at Bell Potter are positive about Accent Group's outlook. The broker believes that the company's market leadership, strategic growth initiatives, and ongoing expansion into apparel will drive strong earnings growth.
In respect to dividends, Bell Potter is forecasting fully franked dividends of 13.7 cents per share in FY 2025 and then 15.6 cents per share in FY 2026. Based on its latest share price of $1.81, this equates to attractive dividend yields of 7.5% and 8.6%, respectively.
Bell Potter has a buy rating and $2.75 price target on its shares.
Cedar Woods Properties Ltd (ASX: CWP)
Another ASX dividend share that analysts rate as a buy is Cedar Woods. It is a leading Australian property developer with a focus on residential communities and commercial projects.
Bell Potter believes that the company's shares are undervalued at current levels. Especially given its belief that Cedar Woods is well-positioned for sustained growth, with a diversified development pipeline and improving industry conditions.
It also notes that cost pressures are moderating, and labour availability is improving, which should support earnings in the coming years.
As for income, Cedar Woods is expected to pay fully franked dividends of 27 cents per share in FY 2025 and then 31 cents per share in FY 2026. Based on the current share price of $5.29, this equates to dividend yields of 5.1% and 5.9%, respectively.
Bell Potter has a buy rating and $7.20 price target on its shares.
Adairs Ltd (ASX: ADH)
Finally, Adairs could be an ASX dividend share to buy to beat falling interest rates. It is a leading homewares and furniture retailer.
Morgans is a fan of the company. It highlights that Adairs is benefiting from strong sales momentum and operational efficiencies from its new national distribution centre. And while some areas of its business have faced headwinds, the broker highlights that Adairs' core brand is performing well, with sales up 15.2% in the second half of FY 2025 so far.
On the dividend front, Morgans is forecasting Adairs to pay fully franked dividends of 14 cents per share in FY 2025 and then 17 cents per share in FY 2026. Based on its current share price of $2.18, this equates to dividend yields of 6.4% and 7.8%, respectively.
The broker has an add rating and $2.85 price target on its shares.
