With interest rates tipped to fall later this year, many income investors are turning their attention back to dividend-paying shares.
Two ASX dividend shares that could be worth considering in a low interest rate environment are listed below. Here's why analysts rate them as buys:
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Elders Ltd (ASX: ELD)
The first ASX dividend share to look at is Elders.
It is a leading supplier of agricultural products to rural and regional Australia, with strong agency positions in livestock, wool, and real estate.
Bell Potter is positive on the company and thinks now could be a good time to pick up its shares. Especially given its belief that trading conditions have improved meaningfully since this time last year, which bodes well for its performance in FY 2025 and beyond. The broker explains:
We would expect many of the issues that plagued 1Q24 have largely unwound in 1Q25 and as such would anticipate a more normal phasing in earnings in FY25e. We remain of the view that the Delta-Elders overlap is limited and manageable (we note the ACCC's final Supermarkets review is also overdue) and would see this a catalyst for momentum to return.
As for income, Bell Potter is forecasting a partially franked 36 cents per share dividend in FY 2025 and then a fully franked 43 cents per share dividend in FY 2026. Based on its current share price of $6.44, this equates to dividend yields of 5.6% and 6.7%, respectively.
Bell Potter has a buy rating and lofty $9.40 price target on its shares. This implies potential upside of almost 50% for investors.
Nick Scali Limited (ASX: NCK)
Another ASX dividend share to look at is Nick Scali. It is one of Australia's leading furniture retailers, known for its high-quality sofas and home furnishings. As well as the eponymous Nick Scali brand, it operates the Plush and Fabb brands.
Despite the tough retail environment, Nick Scali has continued to perform positively. Macquarie, which is bullish on the stock, commented:
A significant uNPAT beat of 28% to the mid-point of guidance supported by GM% ahead of expectations. We expect further GM% upside to be driven by Nick Scali products delivered to UK stores. Potential for further store openings in the UK would provide upside to current forecasts.
In respect to dividends, Macquarie expects fully franked payouts of 54.1 cents per share in FY 2025 and then 66.2 cents per share in FY 2026. Based on its current share price of $18.26, this implies dividend yields of 3% and 3.6%, respectively.
The broker has an outperform rating on its shares with a price target of $18.60.
