ASX domination: The 5.5% dividend stock to watch

There are a lot of ASX dividend stocks to choose from on the Australian share market.

But one for income investors to watch closely could be Accent Group Ltd (ASX: AX1).

Not only does the footwear focused retailer offer a very generous dividend yield today, but it has been tipped to continue increasing its dividend meaningfully in the coming years.

Here’s what you need to know about this ASX dividend stock

Just 10 years ago, the HypeDC and The Athlete’s Foot owner was paying investors a 5 cents per share fully franked dividend.

But thanks to the popularity of its retail brands and management’s relentless store rollouts, this year the company has been tipped to be in a position to pay more than double this amount.

But if you thought the growth was going to slow, think again. Analysts are then expecting a dividend over triple what it paid 10 years ago in FY 2026.

Dividend forecast

Let’s take a look now at what analysts at Bell Potter are forecasting from this ASX dividend stock in the coming years. The broker expects:

• FY 2024
  • Underlying NPAT of $77.9 million
  • Dividends per share 11.1 cents
• FY 2025
  • Underlying NPAT of $91.8 million
  • Dividends per share 13 cents
• FY 2026
  • Underlying NPAT of $109.9 million
  • Dividends per share 15.6 cents

Based on the current Accent share price of $2.02, this will mean fully franked dividend yields of 5.5%, 6.4%, and 7.7%, respectively.

But the returns won’t stop there. Bell Potter currently has a buy rating and $2.35 price target on this ASX dividend stock. This implies over 16% upside for investors from current levels over the next 12 months.

If we add in the forecast dividends for FY 2024, the total 12-month potential return increases to almost 22%. The broker commented:

We continue to view AX1 as a relative preference in our retail sector coverage given the company’s scale & exposure in terms of channels, brands & size as the overall industry navigates a challenging retail spend environment in addition to growth adjacencies via exclusive partnerships with globally winning brands such as Hoka and growing vertical brand strategy (~8% on owned sales).

The post ASX domination: The 5.5% dividend stock to watch appeared first on The Motley Fool Australia.

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More reading

• Top ASX shares to buy in February 2024
• Buying ASX retail shares? You’ll want to see these numbers
• Buy Westpac and these ASX 300 dividend shares now: analysts
• How investing $100 per week can create $1,500 in annual ASX dividend income
• Here’s why I invested in Accent shares for dividend income

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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent 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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