1 ASX dividend stock down 41% I’d buy right now

The Premier Investments Ltd (ASX: PMV) share price has sunk around 40% from September 2025, as the chart below shows. This could be a great time to consider the ASX dividend stock as an opportunity for both steady dividends and potential capital growth.

Premier Investments derives its value from three businesses – Peter Alexander, Smiggle and a substantial stake of Breville Group Ltd (ASX: BRG).

In my view, Premier Investments could be a compelling opportunity whilst investors are cautious about the prospects of Smiggle and the US tariffs impacting Breville.

Let’s look at the dividend potential of the business.

ASX dividend stock passive income payout potential

Following the sale of its apparel brands (Just Jeans, Jay Jays, Dotti and so on) to Myer Holdings Ltd (ASX: MYR), the company’s net profit generation and dividend potential has been reset.

The broker UBS predicts that Premier Investments could generate net profit after tax of $143 million in the (current) 2026 financial year. That equates to potential earnings per share (EPS) of 90 cents, allowing the business to deliver projected passive income of 58 cents per share by the ASX dividend stock.

If the company does deliver that level of income to investors, it’d equate to a grossed-up dividend yield of close to 6%, including franking credits.

But, the payout is projected to steadily increase in the coming years.

UBS suggests the dividend per share could climb to 64 cents in FY27, 73 cents in FY28, 78 cents in FY29 and 84 cents in FY30.

Therefore, by FY30, investing at the current valuation could lead to a grossed-up dividend yield of almost 9%, including franking credits.

Can earnings grow as predicted?

UBS currently expects that the ASX dividend stock’s net profit could climb every year between FY26 to FY30, going from $143 million to $208 million over that period, representing an increase of 45%.

The broker is estimating that Peter Alexander could grow its sales revenue by around 7% in the financial years FY26 to FY28, and then at around 4% for FY29 onwards.

UBS said consumers had upgraded their perception of Peter Alexander, from a functional product to also a gifting brand, increasing the revenue pool and the ability to sustain premium prices.

The broker believes:

Efforts to expand the addressable market into men’s, kids, accessories and plus have increased category & customer participation. This expansion requires a larger store size (from ~150sqm to now ~300sqm), with refurbishments a growth driver, while store growth in ANZ continues as well as further online penetration (in ANZ & beyond).

PA’s entry into the UK has commenced (3 stores) but despite very good in-store execution, performance to date is arguably below expectations noting a weak UK consumer environment and the challenge of replicating the PA ANZ brand perception in a new market.

However, Smiggle is expected to see sales fall 10% in FY26, be flat in FY27 and then deliver growth of 2% in FY28 onwards. UBS said that young families are exposed to the cost of living across all markets and it hasn’t been able to expand its product categories because its customer base is set at ages 4 to 11.

But, the weakness is already recognised by the market, hence the drop of the Premier Investments share price.

UBS has a buy rating on the ASX dividend stock, with a price target of $19, suggesting a potentially significant rise during 2026.

The post 1 ASX dividend stock down 41% I’d buy right now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Breville Group. 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 Myer and Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.