There are a lot of ASX dividend stocks out there for income investors to choose from on the local share market, but which ones could be among the best to buy now?
Let's have a look at two that analysts currently rate very highly. They are as follows:
Image source: Getty Images
BHP Group Ltd (ASX: BHP)
The team at Goldman Sachs thinks that mining giant BHP could be one of the best ASX dividend stocks to buy right now.
The broker is bullish on BHP for a number of reasons. This includes its exposure to copper, its superior free cash flow generation, and the below average multiples its shares trade on. It explains:
BHP is currently trading at ~0.8x NAV and ~6x NTM EBITDA, below the 25-yr average EV/EBITDA of 6.5-7x, but at a premium to RIO on ~5.3x and ~0.7x NAV. Over the last 10 years, BHP has traded at a ~0.5x premium to global mining peers. We believe this premium can be partly maintained due to ongoing superior margins and operating performance (particularly in Pilbara iron ore where BHP maintains superior FCF/t vs. peers).
Goldman expects this to underpin fully franked dividends per share of ~A$1.55 in FY 2025 and then ~A$1.44 in FY 2026. Based on the current BHP share price of $38.75, this would mean dividend yields of 4% and 3.7%, respectively.
The broker also sees plenty of upside for investors with its buy rating and $45.10 price target.
Cedar Woods Properties Ltd (ASX: CWP)
Over at Bell Potter, its analysts still rate Cedar Woods as an ASX dividend stock to buy despite a strong rally in recent weeks.
The broker believes the residential property developer is well-placed for growth due to Australia's extreme housing shortage. It explains:
CWP has a substantial pipeline of residential projects amidst Australia's extreme housing shortage, record presales, and positive forward commentary from a historically conservative management team. We are attracted to the current valuation – trading below NTA (versus a long term average premium of +30%) and at a forward PE of 9.5x, which undervalues its double-digit growth profile.
Bell Potter expects this to allow the company to pay dividends per share of 28 cents in FY 2025 and then 32 cents in FY 2026. Based on its current share price of $6.51, this would mean dividend yields of 4.3% and 4.9%, respectively.
Its analysts currently have a buy rating and $7.30 price target on Cedar Woods' shares.
