Forget Westpac and buy these ASX dividend shares

MotleyFool
05 Jun

Westpac Banking Corp (ASX: WBC) shares are a popular option for income investors.

But with most analysts calling the bank's shares overvalued now, investors may be better off looking elsewhere for their income fix.

But which ASX dividend shares? Let's look at a couple that analysts are tipping as buys right now. They are as follows:

Aurizon Holdings Ltd (ASX: AZJ)

This rail freight operator could be an ASX dividend share to buy according to analysts at Morgans. It currently has an add rating and $3.10 price target on its shares.

The broker believes the market has been too negative on Aurizon and sees potential for some big dividend yields in the near term. It said:

There is negative narrative around the lack of growth (or even declining earnings) in the Bulk and Containerised Freight segments. We suspect this has contributed to the recent sub debt issue and announcement of a cost-out program.

However, the higher quality Network and Coal segments contribute the bulk of earnings. We make FY25-27F earnings and DPS downgrades (material in FY25F), and allow for no further buybacks but instead assume debt is paid down with free cashflow. Upgrade to ADD. Revised target price $3.10. Trading on a dividend yield of c.8%, double-digit free cashflow yield, and 5-6x EV/EBITDA (all FY26F).

Morgans is forecasting dividends per share of 15 cents in FY 2025 and then 23 cents in FY 2026. Based on its current share price of $2.96, this would mean attractive dividend yields of 5.1% and 7.8%, respectively.

Dexus Convenience Retail REIT (ASX: DXC)

Over at Bell Potter, its analysts think that Dexus Convenience Retail REIT could be an ASX dividend share to buy.

It is a property company that owns a high-quality portfolio of Australian service stations and convenience retail assets primarily located along the country's eastern seaboard. The broker has a buy rating and $3.35 price target on its shares.

Bell Potter thinks that the company's shares are being undervalued by the market. It explains:

DXC remains one of our preferred ways to play externally managed REITs given its high distribution yield (c.7.1%), price discovery via asset sales (with >10% of the book recycled last 18m), yet trading at a -20% discount to NTA, despite NTA starting to regrow.

With EV growth moderating last 6mths, combined with operator reinvestment into the sector (BP for ConvenienceX, Viva for OTR, i7 Holdings for 7/Eleven) and stabilising funding costs, we see a platform to grow from whilst being 'paid to wait' at attractive risk-adjusted pricing.

As for income, the broker is forecasting dividends of 20.6 cents per share in FY 2025 and then 20.9 cents per share in FY 2026. Based on its current share price of $2.95, this equates to dividend yields of 7% and 7.1%, respectively.

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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