I’d buy 11,429 shares of this ASX stock to aim for $100 a month of passive income

The ASX stock Shaver Shop Group Ltd (ASX: SSG) has built a reputation as an impressive ASX dividend share, in my view.

The business currently operates 125 Shaver Shop stores across Australia and New Zealand, in addition to its websites.

It says it offers customers a wide range of quality brands, at competitive prices, supported by “excellent staff product knowledge”. The business sources products from major manufacturers. Its specialist knowledge and strong track record in the personal grooming segment enable it to negotiate exclusive products with suppliers.

The company’s core product range includes male and female hair removal products, such as electric shavers, clippers, trimmers, and wet shave items. It also sells items in the categories of oral care, hair care, massage, air treatment, and beauty.

ASX dividend stock credentials

Shaver Shop has delivered investors a very reliable dividend over the last several years.

It increased its dividend each year between FY17 and FY23. The business then maintained its annual dividend per share at 10.2 cents in FY24. It hiked its payout to 10.3 cents per share in FY25.

There are plenty of ASX stocks that have cut their dividend in recent years, including retailers. Shaver Shop, on the other hand, has managed to provide investors with resilience.

According to the forecast on CMC Markets, Shaver Shop is projected to pay an annual dividend of 10.5 cents per share in FY26. That translates into a cash dividend yield of 7.4% and a grossed-up dividend yield of 10.6%, including franking credits.

The business doesn’t pay a monthly dividend, so I think it’s better to consider it an annual goal and then divide it by 12.

For an investor to generate $100 of monthly income, we’re talking about an annual goal of $1,200 cash. This means investors would need to own 11,429 Shaver Shop shares.  

But, if we were to include the franking credits as part of the passive income goal, an investor would need only 8,000 Shaver Shop shares.

Why the outlook is positive

With a dividend yield that large, it doesn’t need to deliver huge capital growth to deliver pleasing overall returns.

The forecast on CMC Markets suggests that the business could increase its dividend per share to 11.6 cents again in FY27. It’s also projected to deliver earnings per share (EPS) growth of 11.7 cents in FY26 (a slight increase) and then deliver 12.8 cents of EPS in FY27.

That means it’s only trading at 12x FY26’s estimated earnings and 11x FY27’s estimated earnings.

The ASX stock can grow earnings through several strategies, including opening more stores, collaborating with additional brands, expanding its own private brand (Transform-U), and increasing online sales.

Overall, I think it has a promising future for both earnings growth and good dividends.

The post I’d buy 11,429 shares of this ASX stock to aim for $100 a month of passive income 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 recommended Shaver Shop Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.