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Date : 04/05/2024

Top 3 ASX Dividend Shares For May 2024

Like investors across the globe, Aussies hold a unique appeal for dividend shares, which are looking for steady income in addition to potential capital gains. The Australian Stock Exchange (ASX) presents plenty of such options, boasting an average dividend yield of around 4%. However, savvy investors often look beyond this average, seeking out high-yield stocks that promise more attractive returns. In this comprehensive analysis, we delve into three such promising ASX dividend shares: Rural Funds Group (ASX: RFF), Universal Store Holdings Ltd (ASX: UNI), and South32 Ltd (ASX: S32), each offering distinct opportunities and advantages.

Rural Funds Group (ASX: RFF)

Rural Funds Group (ASX: RFF) operates within the agricultural sector, managing a diversified portfolio that includes almond and macadamia orchards, poultry infrastructure, vineyards, cattle properties, and essential water rights. According to Bell Potter, the current valuation of RFF shares suggests a significant undervaluation, marked by a ~30% discount to market NAV. This analysis posits that the market still needs to fully recognise the recent improvements in profitability across the company’s operations.

Bell Potter advocates for Rural Funds as a prime income share, projecting appealing dividend yields of 5.9% for FY 2024 and FY 2025, predicated on dividends per share of 11.7 cents and a share price of $1.99. The brokerage maintains a buy rating with a price target of $2.40 on RFF, signalling strong future performance and investor return potential.

Rural Funds Group Dividend Stocks

Universal Store Holdings Ltd (ASX: UNI)

Universal Store Holdings Ltd (ASX: UNI) captures a significant market share in the youth fashion sector, leveraging in-demand brands and expansion strategies that promise robust long-term growth. Morgans, a notable brokerage, remains bullish on Universal Store due to its innovative retail approaches and the successful performance of its women’s banner, Perfect Stranger. This success supports the company’s aggressive network expansion strategy. Additionally, Universal Store’s acquisitions are set to broaden its wholesale distribution, enhancing its market reach and revenue streams.

Anticipating continuous growth, Morgans forecasts dividends per share to increase from 26 cents in FY 2024 to 29 cents in FY 2025, corresponding to yields of 4.55% and 5.1%, respectively, based on the current share price of $5.70. With a target price of $6.50 and an add rating, Universal Store presents a compelling investment case for those seeking growth coupled with reliable dividend income.

Universal Sstore Holdings Dividend Stocks

South32 Ltd (ASX: S32)

South32 Ltd (ASX: S32) operates across various commodity sectors, with a significant portion of its revenue derived from copper, aluminium, zinc, and metallurgical coal—commodities currently experiencing strong market prices. Goldman Sachs highlights that these commodities will significantly bolster South32’s earnings over the next 12 months. Despite this, the expected dividends suggest a gradual realisation of yields, starting at 4 US cents per share in FY 2024 and potentially increasing to 18 US cents by FY 2026, yielding 1.8%, 5.6%, and 8.5%, respectively, given the current share price of $3.37.

Goldman Sachs maintains a buy rating on South32 with a price target of $3.80, endorsing the stock as a robust option for investors aiming for high dividend returns in the medium to long term.

South32 Limited Dividend Stocks

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