2 strong ASX dividend shares to buy now for income

MotleyFool
04-08

There are a lot of ASX dividend shares for investors to choose from on the Australian share market.

To narrow things down, let's take a look at a couple that analysts are tipping as buys. They are as follows:

BHP Group Ltd (ASX: BHP)

The first ASX dividend share that could be a buy is mining giant BHP. That's the view of analysts at Goldman Sachs, which like the Big Australian due to its exposure to the in-demand metal, copper.

The broker believes that copper is going to become very important to BHP's earnings in the coming years as it grows production to take advantage of supply side challenges. The broker said:

We remain bullish on copper due to ongoing supply side challenges and increasing demand, and expect BHP's copper EBITDA to increase by ~US$5bn to ~US$13bn by FY26 (~45% of group EBITDA). Under our base case, copper EBITDA is expected to reach ~US$17bn by FY35, at GSe long run copper of ~US$4.6/lb (real $, from 2028).

In respect to income, Goldman expects this to underpin dividends per share of 102 US cents (A$1.70) in FY 2025 and then 112 US cents (A$1.87) in FY 2026. Based on the current BHP share price of $34.57, this equates to fully franked dividend yields of 4.9% and 5.4%, respectively.

Goldman has a buy rating and $47.30 price target on the miner's shares.

Steadfast Group Ltd (ASX: SDF)

Goldman Sachs also thinks that Steadfast could be an ASX dividend share to buy. Steadfast is a group of insurance brokers providing commercial insurance solutions for SME clients. It also operates the SDF network of brokers.

Its analysts like the company due to its strong position in the market, as well as the favourable operating environment. They said:

We like SDF because of the industry structure favouring insurance brokers. 1) Premium rate environment remains supportive of organic growth trends (albeit moderating); 2) Little to no exposure to underwriting risk with revenues largely dependent on premiums written; 3) An opportunity to acquire EPS accretively with unlisted acquisitions at multiples accretive to earnings (including offshore); 4) A defensive business model which is relatively resilient to economic activity; 5) Valuation appeal compared to global peers.

Goldman is expecting this to support fully franked dividends per share of 20 cents in FY 2025 and then 22 cents in FY 2026. Based on its current share price of $5.49, this equates to dividend yields of 3.6% and 4%, respectively.

The broker has a buy rating and $6.50 price target on Streadfast's shares.

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