Buy these ASX dividend stocks for 20% to 40% returns

The good news for income investors is that there are lots of ASX dividend stocks to choose from on the local share market.

But which ones could be buys this month?

Let's look at two that analysts currently rate as buys with great dividend yields and major upside potential. They are as follows:

Dexus Convenience Retail REIT (ASX: DXC)

Dexus Convenience Retail REIT could be an ASX dividend stock to buy according to Bell Potter.

It is the owner of a quality portfolio of Australian service stations and convenience retail assets that are predominantly located on Australia's eastern seaboard.

Its analysts recently said that "while we do see asset values declining (BPe 10bp cap rate expansion), trading at a 20% discount to NTA and 10% discount to BPe NAV looks too punitive to us for a defensive sub-sector."

In addition, the broker is expecting some good yields from its shares. It is forecasting dividends per share of approximately 21 cents in FY 2025 and FY 2026. Based on its current share price of $2.91, this implies dividend yields of 7.2% in both years.

Bell Potter has a buy rating and $3.30 price target on its shares. This implies potential upside of just over 13% for investors. Combined with its dividends, a total potential 12-month return in excess of 20% is expected by the broker.

Rural Funds Group (ASX: RFF)

Another ASX dividend stock for income investors to consider buying is agricultural focused real estate investment trust (REIT) Rural Funds.

It owns a high quality portfolio of assets across a range of agricultural industries that are leased on long term agreements to major players in the industry. This includes almond and macadamia orchards, premium vineyards, water entitlements, cropping and cattle farms.

Among its tenants you will find Australia's largest meat processor, JBS Australia, and wine giant Treasury Wine Estates Ltd (ASX: TWE).

Bell Potter is a big fan and feels that its shares are being undervalued by the market. The broker also expects attractive dividend yields in the near term. It is forecasting dividends per share of 11.7 cents in FY 2025 and then 12.2 cents in FY 2026. Based on the current Rural Funds share price of $1.82, this represents yields of 6.4% and 6.7%, respectively.

Bell Potter has a buy rating and $2.50 price target on its shares. This suggests that its shares could rise by a sizeable 37% over the next 12 months. Including dividends, a total potential return of 43%+ is on the cards according to the broker.

The post Buy these ASX dividend stocks for 20% to 40% returns appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has positions in Treasury Wine Estates. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Rural Funds Group. The Motley Fool Australia has recommended Treasury Wine Estates. 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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