With so many ASX dividend shares to choose from on the Australian share market, it can be hard to decide which ones to buy over others.
To narrow things down, let's take a look at two that brokers have named as buys this week. They are as follows:
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Aurizon Holdings Ltd (ASX: AZJ)
The team at Morgans thinks that income investors should be buying rail freight operator Aurizon.
The broker is expecting some great yields from this ASX dividend share in the near term and recently upgraded them to an add rating with a $3.10 price target. Commenting on its upgrade, it said:
There is negative narrative around the lack of growth (or even declining earnings) in the Bulk and Containerised Freight segments. We suspect this has contributed to the recent sub debt issue and announcement of a cost-out program.
However, the higher quality Network and Coal segments contribute the bulk of earnings. We make FY25-27F earnings and DPS downgrades (material in FY25F), and allow for no further buybacks but instead assume debt is paid down with free cashflow. Upgrade to ADD. Revised target price $3.10. Trading on a dividend yield of c.8%, double-digit free cashflow yield, and 5-6x EV/EBITDA (all FY26F).
Morgans is forecasting dividends per share of 15 cents in FY 2025 and then 23 cents in FY 2026. Based on its current share price of $2.94, this represents dividend yields of 5.1% and 7.8%, respectively.
Telstra Group Ltd (ASX: TLS)
Goldman Sachs thinks that telco giant Telstra could be an ASX dividend share to buy.
In response to its strategy update this week, the broker has reaffirmed its buy rating and $4.90 price target on its shares. It said:
Telstra has a clear focus on delivering consistent and predictable earnings growth, through simplifying the business, monetizing its core value proposition of superior connectivity, and maintaining tight cost discipline through a commitment to positive operate leverage.
Telstra will look to maximize return to shareholders, with > A$20bn financial capacity through to FY30, which we estimate can fund 1¢ p.a. of annual dividend growth and A$7-8bn of buybacks/special dividends – which could be potentially supplemented by further asset sales.
In respect to income, Goldman Sachs is forecasting fully franked dividends per share of 19 cents in FY 2025 and then 20 cents in FY 2026. Based on the current Telstra share price of $4.74, this represents dividend yields of 4% and 4.2%, respectively.
