Why BHP and these ASX dividend stocks are buys

MotleyFool
06 Jun

There are plenty of ASX dividend stocks to choose from on the Australian share market.

Three that have recently been given buy ratings by brokers are named below. Here's what they are recommending to clients:

Adairs Ltd (ASX: ADH)

The first ASX dividend stock to look at is Adairs.

It is a leading homewares and furniture retailer with brands like Adairs, Focus on Furniture, and Mocka.

The team at Morgans is positive on the company and highlights that it is benefiting from a streamlined supply chain through its new national distribution centre.

It expects this to underpin fully franked dividends of 14 cents per share in FY 2025 and 17 cents in FY 2026. Based on the current share price of $2.74 that equates to attractive dividend yields of 5.1% and 6.2%, respectively.

Morgans has an add rating and $2.85 price target, suggesting meaningful upside ahead.

BHP Group Ltd (ASX: BHP)

The team at Goldman Sachs has named mining giant BHP as an ASX dividend stock to buy.

The broker is positive on the miner due to its exposure to copper. In addition, it also feels that it is being undervalued by the market. It explains: "BHP is currently trading at ~0.8x NAV and ~6x NTM EBITDA, below the 25-yr average EV/EBITDA of 6.5-7x."

As for income, Goldman Sachs is forecasting fully franked dividends per share of approximately ~A$1.56 in FY 2025 and then ~A$1.45 in FY 2026. Based on the current BHP share price of $37.98, this would mean dividend yields of 4.1% and 3.8%, respectively.

Goldman Sachs has a buy rating and $45.10 price target on its shares.

GQG Partners Inc. (ASX: GQG)

Another ASX dividend stock with potential to offer big dividend yields is GQG Partners.

It is a global investment company that manages funds on behalf of large pension funds, sovereign funds, wealth management firms, and financial institutions.

While it has been a rocky 12 months due to its investments in the troubled Adani Group, Macquarie remains very positive. It recently noted that "at <9x NTM P/E with a >10% yield, valuation remains attractive."

In respect to income, Macquarie is forecasting dividends of 14.7 US cents per share (22.6 Australian cents) in FY 2025 and then 16 US cents per share (24.6 Australian cents) in FY 2026. Based on its current share price of $2.12, this would mean dividend yields of 10.5% and 11.5%, respectively.

The broker has an outperform rating and $2.90 price target on its shares.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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