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Income investors seeking stable returns often turn to ASX dividend stocks for their potential to generate consistent income. In the vast landscape of dividend-paying stocks, analysts play a crucial role in identifying those with strong growth potential. Here, we delve into two ASX dividend stocks currently rated as buys by analysts, providing valuable insights for income-focused investors.
Baby Bunting Group Ltd (ASX:BBN)
Overview: Baby Bunting, a leading baby products retailer, has caught the attention of analysts despite facing a challenging period. Morgans, a prominent brokerage firm, expresses optimism about the company's outlook.
Analysts' Optimism: Morgans recently increased its NPAT estimates for Baby Bunting by 17% in FY24 and 7% in FY25. This positive adjustment is attributed to effective cost-out initiatives and higher sales assumptions.
Dividend Yield Predictions: Analysts foresee generous dividend yields in the near term. Projections include fully franked dividends of 9.9 cents per share in FY 2024 and 12.9 cents in FY 2025. With the current share price at AU$1.89, this translates to yields of 5.2% and 6.8%, respectively.
Analyst Rating: Morgans has given Baby Bunting an "add" rating, coupled with a AU$2.50 price target on its shares.
Coles Group Ltd (ASX:COL)
Introduction: Coles Group, a supermarket giant, stands out as another ASX dividend stock with a positive outlook. Analysts, particularly at Citi, highlight key factors contributing to their favorable stance.
Positive Sentiment: Citi expresses positivity driven, in part, by anti-theft measures implemented by Coles Group. Analysts anticipate a material reversal of the drag from theft on gross margin in 2H24.
Dividend Projections: Citi projects fully franked dividends of 64 cents per share in FY 2024 and 70 cents per share in FY 2025. With the current share price at AU$15.79, this implies yields of 4% and 4.4%, respectively.
Analyst Rating: Citi assigns a "buy" rating to Coles Group shares, accompanied by a $17.50 price target.
Conclusion
In conclusion, these ASX dividend stocks present compelling opportunities for income investors. Baby Bunting and Coles Group, backed by optimistic analyst recommendations, offer not only potential capital appreciation but also attractive dividend yields.
