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While Westpac Banking Corp (ASX: WBC) remains a popular choice for income investors, its shares are currently trading at a 52-week high, posing higher risks for potential investors. Moreover, they are trading beyond the valuations set by almost all brokers, further complicating the investment proposition.
In the absence of a significant pullback that would create a more attractive entry point, income-focused investors may find better value in other ASX dividend stocks, as highlighted below:
Telstra Corporation Ltd (ASX: TLS)
Goldman Sachs considers the telecommunications giant Telstra as a promising option for income investors. The broker's positive outlook is based on Telstra's low-risk earnings profile and anticipated dividend growth over the period from FY 2023 to FY 2026.
Goldman Sachs expects Telstra to pay fully franked dividends of 18 cents per share in FY 2024, 19 cents per share in FY 2025, and 20 cents per share in FY 2026. With Telstra's current share price at $3.97, these dividends translate to yields of 4.5%, 4.8%, and 5%, respectively.
The broker maintains a buy rating and a $4.65 price target on Telstra's shares.
Transurban Group (ASX: TCL)
Another ASX dividend stock that analysts believe could offer compelling value at current levels is toll road operator Transurban.
Citi remains optimistic about Transurban following the release of its first-half results, expecting the company to deliver dividends exceeding guidance in FY 2024. The broker forecasts dividends per share of 63 cents in FY 2024, 65 cents in FY 2025, and 68 cents in FY 2026. Considering Transurban's current share price at $12.90, these dividends imply yields of 4.9%, 5%, and 5.3%, respectively.
Citi maintains a buy rating and a $15.60 price target on Transurban's shares.
In contrast, Goldman Sachs and Citi have neutral ratings on Westpac's shares, with price targets of $22.85 and $22.25, respectively.
