Buy these fantastic ASX dividend stocks for a second income

MotleyFool
01-23

If you are searching for a second income, then the share market could be the place to do it.

This is because there are a large number of ASX stocks paying out dividends every six months (or more frequently).

But which fantastic ASX dividend stocks would be good options for income investors today? Let's look at two buy-rated picks. They are as follows:

Harvey Norman Holdings Limited (ASX: HVN)

Bell Potter thinks that retail giant Harvey Norman would be a great option for income investors.

Especially given its belief that the ASX dividend stock is about to benefit from a major artificial intelligence fuelled upgrade cycle. This is expected to support some big dividend payments in the coming years. It said:

We see a sizable upside from the AI driven upgrade cycle/replacement cycle of devices purchased during COVID-peak to Consumer Electronics sales at HVN ahead. We view HVN as supported by exclusive access from brands/chip manufacturers given large format stores globally which are attractive to global technology brands/suppliers when launching new products. We see trading in the Black Friday weekend from today and into Christmas as a near-term catalyst with early signs to-date appearing supportive.

Bell Potter is forecasting fully franked dividends of 25.9 cents per share in FY 2025 and then 28.5 cents per share in FY 2026. Based on the current Harvey Norman share price of $4.80, this equates to attractive 5.4% and 6% dividend yields, respectively.

The broker currently has a buy rating and $5.80 price target on its shares.

HomeCo Daily Needs REIT (ASX: HDN)

Another ASX dividend stock that has been given the thumbs up by analysts is HomeCo Daily Needs.

It is a property company with a focus of investing in convenience-based assets across the target sub-sectors of neighbourhood retail, large format retail and health and services.

HomeCo Daily Needs currently has 51 properties in its portfolio with an impressive 99% occupancy rate. Its tenants include blue chips such as Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES), and Woolworths Group Ltd (ASX: WOW).

Morgans is a fan and believes it is positioned for growth. It recently commented:

The portfolio has resilient cashflows and continues to be a beneficiary of accelerating click & collect trends. +80% of tenants are national and ~75% of tenants offer click & collect reinforcing the importance of assets being able to support 'last mile logistics'. Sites are also in strategic locations with strong population growth (+80% metro). HDN offers an attractive distribution yield and the development pipeline provides growth opportunities.

In respect to dividends, Morgans is forecasting dividends per share of 8.5 cents in FY 2025 and then 8.7 cents in FY 2026. Based on the current HomeCo Daily Needs share price of $1.17, this will mean dividend yields of 7.25% and 7.4%, respectively.

The broker has an add rating and $1.36 price target on its shares.

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