Buy Telstra and this ASX dividend stock for 4% to 7% yields

If you are wanting to make some additions to your income portfolio this month, then it could pay to listen to what analysts are saying about the ASX dividend stocks in this article.

Here's what they are currently recommending to clients and why:

Dexus Convenience Retail REIT (ASX: DXC)

The Dexus Convenience Retail REIT could be an ASX dividend stock for income investors to buy this month.

That's the view of analysts at Bell Potter, which are very positive on the service stations and convenience retail focused property company.

The broker thinks that the company's shares are undervalued at current levels. It explains:

DXC remains one of our preferred ways to play externally managed REITs given its high distribution yield (c.7.1%), price discovery via asset sales (with >10% of the book recycled last 18m), yet trading at a -20% discount to NTA, despite NTA starting to regrow. With EV growth moderating last 6mths, combined with operator reinvestment into the sector (BP for ConvenienceX, Viva for OTR, i7 Holdings for 7/Eleven) and stabilising funding costs, we see a platform to grow from whilst being 'paid to wait' at attractive risk-adjusted pricing.

Bell Potter also believes that some big dividend yields are coming in the near term. It is forecasting dividends of 20.6 cents per share in FY 2025 and then 20.9 cents per share in FY 2026. Based on its current share price of $3.03, this equates to dividend yields of 6.8% and 6.9%, respectively.

The broker has a buy rating and $3.35 price target on its shares.

Telstra Group Ltd (ASX: TLS)

A second ASX dividend stock that gets the thumbs up from analysts is Telstra.

It is of course Australia's largest telco operator. At the last count, it was providing around 22.5 million retail mobile services and 3.4 million retail bundle and data services.

Macquarie has become bullish on the company recently. This is due to the announcement of its Connected Future 30 strategy, which it believes will drive solid earnings and dividend growth in the coming years. It explains:

Underlying ROIC expansion to 10% by FY30, driven by operating leverage. MSD cash EPS CAGR to FY30, with multiple cost-out options. Scope for further capital mgmt. Improving EPS profile and strong cash generation drives scope for growing dividend and/or buybacks. Network as a Product (NaaP) supports sales growth. Improving value proposition supports ARPU increases through mix, price & new revenue.

In respect to income, the broker is forecasting fully franked dividends of 19.9 cents per share in FY 2025 and then 22 cents per share in FY 2026. Based on its current share price of $4.84, this would mean dividend yields of 4.1% and 4.5%, respectively.

Macquarie currently has an outperform rating and $5.28 price target on its shares.

The post Buy Telstra and this ASX dividend stock for 4% to 7% yields appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group and Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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