1 ASX dividend stock down 36% I’d buy right now

When a dividend-paying business is trading too cheaply, it can result in a very pleasing dividend yield. That’s because the lower the price/earnings (P/E) ratio is, the higher the yield is from an ASX dividend stock.

The business Inghams Group Ltd (ASX: ING) is one of the largest poultry businesses in Australia. It has supply arrangements with major retail, wholesalers and quick service restaurant (QSR) customers. Inghams also produces turkey, stockfeed and value-enhanced poultry products for changing consumer preferences.

As the chart below shows, the Inghams share price has declined more than 30% from May 2025 following challenging operating conditions and lower-than-expected profitability.

Analysts expect the ASX dividend stock’s earnings and dividend to bounce back in the medium-term, which is why this could be a good time to consider the business.

Outlook for earnings and dividend rebound

The business is facing the prospect of reporting a difficult first half of FY26, but things could improve significantly after that.

The projection on CMC Markets suggests Inghams could generate earnings per share (EPS) of 19.7 cents in FY26 and it could pay an annual dividend per share of 13.5 cents. That payout would translate into a grossed-up dividend yield of 7.75%, including franking credits.

But, there could then be a significant improvement in FY27. The projections suggest a potential rise of EPS to 25.8 cents and the dividend payout could increase to 17.3 cents per share.

Therefore, the FY27 payout could translate into a grossed-up dividend yield of close to 10%, including franking credits. That’d be very appealing for dividend investors, if that happens.

What positives are there for the ASX dividend stock?

It was only weeks ago that the business gave an update at its annual general meeting (AGM) which was promising considering how cheaply the business is now trading.

The company is expecting to deliver underlying operating profit (EBITDA) of $80 million in the first half of FY26. For the full 2026 financial year, the company has guided between $215 million to $230 million of underlying operating profit.

Inghams says that earnings guidance is heavily weighted to the second half because of weak trading in the fourth quarter of FY25, with the timing of operational improvements and stabilisation of the inventory position after “corrective actions” in the first half of FY26.

The ASX dividend stock is seeing an “improved revenue outlook” thanks to core poultry volumes being slightly higher than FY25, though the net selling price (NSP) was slightly lower.

Inghams also noted that wholesale profit margins are expected to remain favourable.

While operating costs (excluding feed) are rising due to inflation and identified operational challenges, this has been materially offset by between $60 million to $80 million in annualised savings from labour, procurement and site operations initiatives. Feed costs are expected to continue to provide a modest benefit.

At the current Inghams share price, the ASX dividend stock is valued at under 10x FY27’s estimated earnings.

The post 1 ASX dividend stock down 36% I’d buy right now appeared first on The Motley Fool Australia.

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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.