If you are looking for a passive income stream, then the Australian share market remains one of the best places to do it.
But which ASX dividend shares are in the buy zone? Let's take a look at three that analysts are recommending to clients. They are as follows:
Adairs Ltd (ASX: ADH)
The first ASX dividend share that could be a buy according to analysts is Adairs. It is one of Australia's leading homewares retailers.
Adairs has returned to form recently following a difficult period. And with improved inventory management, stronger online performance, and cost efficiencies flowing through, the company now sits in a healthier financial position.
As consumer sentiment gradually improves, Adairs' margin profile and cash generation should improve, supporting its fully franked dividend. Morgans expects the company to pay fully franked dividends of 11 cents per share in FY 2026 and then 15.5 cents per share in FY 2027. Based on its current share price of $1.85, this equates to dividend yields of 6% and 8.4%, respectively.
Morgans has a buy rating and $2.60 price target on its shares.
BHP Group Ltd (ASX: BHP)
Another ASX dividend share that could be a top pick for passive income is BHP.
The Big Australian's world-class and low cost mining assets generate significant free cash flow through the cycle, allowing the company to continue rewarding its shareholders even when commodity prices soften.
Morgan Stanley expects BHP to pay dividends of approximately $1.90 per share in FY 2026 and then $1.70 per share in FY 2027. This would mean dividend yields of 4.4% and 4%, respectively.
The broker also sees plenty of upside for investors with its overweight rating and $48.00 price target.
Dicker Data Ltd (ASX: DDR)
A third ASX dividend share that analysts rate as a buy is Dicker Data. It is an IT hardware and software distributor with a long track record of steady revenue growth, resilient margins, and rising dividends.
The company's relationships with top-tier technology vendors, along with its focus on recurring product demand, have helped support consistent cash flow. And with digital infrastructure spending remaining robust, Dicker Data appears well placed to continue rewarding shareholders with attractive fully franked dividends.
Morgan Stanley is forecasting fully franked dividends per share of 47.6 cents in FY 2025 and then 50.8 cents in FY 2026. This equates to dividend yields of 4.6% and 4.9%, respectively.
The broker has an overweight rating and $10.30 price target on its shares.
