2 highly rated ASX dividend shares that brokers say are buys

asx dividend shares represented by tree made entirely of money

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Are you looking for some dividend shares to add to your income portfolio when the market reopens next week? If you are, then the two listed below could be worth considering.

Here’s why these dividend shares have been rated as buys:

Coles could be an ASX dividend share to buy next week even if it has just hit a 52-week high.

Investors have been buying the supermarket operator’s shares on the belief that the company is well-placed for growth in the current environment. That’s due to its strong market position, defensive qualities, and favourable exposure to inflation.

The good news is that the team at Morgans still see room for the Coles share price to rise further. Its analysts currently have an add rating and $20.65 price target on its shares.

As for dividends, the broker is forecasting fully franked dividends of 61 cents per share in FY 2022 and then 64 cents per share in FY 2023. Based on the latest Coles share price of $18.95, this will mean yields of 3.2% and 3.4%, respectively, over the next two financial years.

It commented:

We continue to see COL as offering good value with the company possessing defensive characteristics and a strong balance sheet (1H22 net cash $54m) allowing ongoing investment for growth.

Costa Group Holdings Ltd (ASX: CGC)

Another ASX dividend share for investors to consider is horticulture company Costa.

Unlike Coles, its shares were sold off and hit a 52-week low last week. This was driven by concerns over Costa’s citrus operations and the impact they could have on its full-year earnings.

One leading broker that remains positive is Goldman Sachs. In response to its trading update, the broker retained its buy rating with a slightly trimmed price target of $3.65.

It also continues to forecast attractive yields in the coming years. Goldman is expecting fully franked dividends of 10.5 cents per share in FY 2022 and then 11.5 cents per share in FY 2023. Based on the latest Costa share price of $2.54, this will mean yields of 4.1% and 4.5%, respectively.

Goldman commented:

We believe price strength has outpaced cost inflation and forecast margin expansion in the current year. CGC continues to effectively manage labour costs, which accounts for c.40% of total costs. We believe CGC is well positioned to deliver strong earnings growth in CY22/CY23/CY24.

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