Invest in BHP and These ASX Dividend Shares

Fortunately for income investors, the Australian share market is home to a large number of ASX dividend-paying shares. But which ones could be good options for them right now? Let's take a look at three options from very different sides of the market that analysts are tipping as buys this month.

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Top ASX Dividend Shares for June

BHP Group Ltd (ASX: BHP)

If you are happy to invest in the mining sector, then it could be a good idea to look at mining giant BHP Group Ltd. Goldman Sachs is optimistic about the Big Australian, believing it will provide investors with a combination of significant gains and attractive dividend yields. 


The broker currently has a $49.00 price target on the miner's shares, compared to the current BHP share price of $42.80. As for dividends, Goldman Sachs is forecasting fully franked dividends of US$1.42 (A$2.13) per share in FY 2024 and US$1.26 (A$1.89) per share in FY 2025. At current levels, this equates to dividend yields of 5% and 4.4%, respectively.

Dexus Convenience Retail REIT (ASX: DXC)

Another ASX dividend share that analysts are positive about is Dexus Convenience Retail REIT. This property company owns a portfolio of service station and convenience retail assets located across Australia. 


The team at Morgans is feeling very positive about the company, assigning it an "add" rating and a $3.23 price target on its shares. In terms of income, Morgans expects dividends per share of 21 cents in both FY 2024 and FY 2025. Based on its current Dexus Convenience Retail REIT share price of $2.67, this will mean very large dividend yields of 7.85% in both years.

Transurban Group (ASX: TCL)

A third ASX dividend share that could be a top buy for income investors according to analysts is Transurban Group. This toll road giant manages and develops road networks in Australia and North America, including key roads such as the Cross City Tunnel, the Eastern Distributor, and Westlink M7 in Australia.


Analysts at Citi are bullish on Transurban, currently having a "buy" rating and a $15.50 price target on its shares. Regarding dividends, Citi forecasts dividends per share of 63.6 cents in FY 2024 and 65.1 cents in FY 2025. Based on the current Transurban share price of $12.58, this translates to yields of 5% and 5.2%, respectively, for income investors.

Why These ASX Dividend Shares Stand Out

Each of these ASX dividend shares stands out due to their strong yield potential. BHP, with its substantial dividends, offers investors a reliable income stream backed by one of the largest mining operations in the world. Dexus Convenience Retail REIT provides exceptionally high yields, reflecting its robust portfolio of retail assets across Australia. Transurban Group's consistent dividend payments are bolstered by its strategic management of crucial toll roads, ensuring stable and predictable income.


Financial health is a crucial factor in evaluating dividend stocks, and these three companies show strong financial resilience. BHP's diversified mining portfolio and strategic management have kept it financially robust even in volatile commodity markets. Dexus Convenience Retail REIT benefits from the essential nature of its service station and retail assets, ensuring steady income and financial stability. Transurban's toll roads are critical infrastructure assets that provide reliable cash flow, supported by long-term concession agreements.


In addition to their income potential, these companies also offer promising growth prospects. BHP continues to explore new mining opportunities and invest in sustainable practices, enhancing its long-term growth potential. Dexus Convenience Retail REIT is strategically positioned to benefit from the steady demand for convenience retail assets, ensuring ongoing growth. Transurban is expanding its toll road network, both domestically and internationally, which will contribute to future revenue growth and higher dividends.


The positive analyst ratings for these shares underscore their potential as solid income investments. Goldman Sachs' confidence in BHP, Morgans' positive outlook for Dexus Convenience Retail REIT, and Citi's bullish stance on Transurban reflect the strong fundamentals and growth potential of these companies. These endorsements provide investors with added assurance regarding the reliability and attractiveness of these dividend shares.

Investment Considerations

While these dividend shares offer attractive income and growth potential, investors should consider the inherent market volatility. The mining sector, where BHP operates, can be particularly susceptible to fluctuations in commodity prices. Property investments like those held by Dexus Convenience Retail REIT can be impacted by changes in real estate market conditions and economic cycles. Toll road operators like Transurban are generally more stable, but regulatory changes and infrastructure developments can influence their performance.


Diversification remains a key strategy for income investors. By including a mix of sectors—such as mining, property, and infrastructure—investors can mitigate risks associated with sector-specific downturns. This diversified approach can help ensure a steady income stream and protect against market volatility.


Sustainability of dividends is another critical factor. Investors should look beyond current yields and evaluate the long-term sustainability of dividend payments. Factors such as company earnings, payout ratios, and cash flow are essential indicators of a company's ability to maintain or increase dividend payments over time.


BHP Group Ltd, Dexus Convenience Retail REIT, and Transurban Group are three ASX dividend shares that analysts consider great picks for income investors this month. Each offers a unique combination of high yields, solid financial health, and promising growth prospects, backed by positive analyst ratings. However, investors should remain mindful of market volatility and the importance of diversification to maximize their investment returns and ensure the sustainability of their income streams.

Location: Australia

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