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Income-focused investors have an abundance of dividend-paying stocks to consider in the ASX. Generating passive income from the local share market is an appealing prospect, but finding the right ASX dividend shares is crucial for income investors. In this article, we highlight two dividend stocks that have recently received "buy" ratings, making them top choices for Australian income investors. Let's explore these opportunities in more detail.
- BHP Group Ltd (ASX: BHP):
BHP Group, often referred to as "The Big Australian," has garnered the attention of analysts at Goldman Sachs. Their optimism is rooted in the company's recent quarterly update, coupled with their positive outlook for attractive dividend yields in the near term.
Goldman Sachs foresees fully franked dividends per share of approximately ~US$1.22 in FY 2024 and US$1.11 in FY 2025. With the current BHP share price at $43.36 and considering the latest exchange rates, this translates to impressive yields of 4.45% and 4.1%, respectively. The broker maintains a "buy" rating on BHP shares and has set a price target of $46.50, making it an attractive option for income investors.
- Universal Store Holdings Ltd (ASX: UNI):
Universal Store is an ASX dividend stock to watch, operating as a youth fashion retailer with brands such as Perfect Stranger, Thrills, and Universal Store.
Despite challenges in the retail sector, Morgans analysts express strong confidence in Universal Store. They emphasize the company's "attractive array of medium-term growth prospects," which are undervalued, given the stock's single-digit FY25 P/E.
Morgans projects significant dividends in the near term, with fully franked dividends per share expected to reach 26 cents in FY 2024 and 29 cents in FY 2025. Considering Universal Store's current share price of $3.30, these projections offer generous yields of 7.9% and 8.8%, respectively. Morgans recommends Universal Store with an "add" rating and a $4.25 price target.
Conclusion:
For Australian income investors seeking reliable dividend income, BHP Group and Universal Store present compelling options. BHP's recent quarterly performance and Goldman Sachs' favorable outlook offer solid dividend potential. Universal Store, while navigating the challenges of the retail sector, maintains an optimistic growth trajectory, resulting in robust income prospects. Both companies have received "buy" ratings from reputable analysts, making them top choices for income investors looking to bolster their passive income streams.
