3 ASX dividend shares I’m backing to outperform in 2023

The ASX dividend share space has interesting businesses from a wide variety of sectors. While resources have gone on a strong run, I think that there are few names that could outperform.

A number of businesses have risen strongly over the last month or so, such as BHP Group Ltd (ASX: BHP) and Aristocrat Leisure Limited (ASX: ALL).

However, there are a few names that I think could continue to do well over the rest of the year.

National Australia Bank Ltd (ASX: NAB)

NAB is one of the biggest ASX bank shares and it’s my preferred major bank.

I think the ASX dividend share is doing very well at the basics under the leadership of Ross McEwan. The business is succeeding at growing profit. In the bank’s FY22 result, it grew cash earnings by 8.3% to $7.1 billion and the full-year dividend grew from $1.27 per share to $1.51 per share.

I’m expecting that the ASX bank share is going to achieve higher profit in 2023 thanks to the higher interest rate and how quickly it has passed rate rises on to borrowers.

I think a combination of stronger profit and larger dividends could excite investors about this business, particularly if loan arrears don’t substantially increase over the year.

According to Commsec, in FY23, NAB is projected to pay a grossed-up dividend yield of 7.7%.

Universal Store Holdings Ltd (ASX: UNI)

I think Universal Store is one of the most promising ASX retail shares. It’s focused on premium youth fashion brands, with both omnichannel retail and wholesale businesses. The company operates Universal and THRILLS, while trialling the Perfect Stranger brand as a standalone retail concept.

The ASX dividend share is steadily expanding its store network which, in turn, grows its ability to make profit.

It’s seeing customers “progressively re-engaging in social activities, enjoying reconnecting in a pre-COVID-like manner, which should lead to favourable trading conditions”. As a result, the company is expecting a higher rate of purchases.

With FY23 to date seeing an “improved” gross margin compared to FY22, and the company relocating to a larger, purpose-built facility for its store support office and distribution centre, I think the ASX dividend share could see higher profit margins in FY23.

According to Commsec, Universal Store is projected to pay a grossed-up dividend yield of 6.75%. By FY25, it could be paying a grossed-up dividend yield of close to 9%, according to the estimates.

GQG Partners Inc (ASX: GQG)

GQG is one of the leading fund managers on the ASX. Its main funds have delivered outperformance over the long term, and are continuing to attract investor funds. In the three months to December 2022, the business experienced net inflows of US$0.9 billion, despite volatility and uncertainty about the global share market.

But it seems interest rate increases could be getting close to the end. This could continue to improve investor sentiment, including the return of more fund inflows over 2023.

The ASX dividend share has committed to pay out 90% of its distributable earnings in dividends, which suggests that there could be good dividend payments in 2023 and beyond.

According to Commsec, GQG could pay an annual dividend per share of 11 cents, which would translate into a dividend yield 7.1%.

The post 3 ASX dividend shares I’m backing to outperform in 2023 appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Buy these growing ASX dividend shares for passive income: Goldman
• Should I buy NAB shares for 2023 dividend potential?
• Investing in ASX 200 dividend shares? Here’s what to look for in 2023: fund manager
• How I’d invest $20,000 in ASX 200 dividend shares in 2023
• Experts say these ASX dividend shares are top buys right now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/8l2mPab