Could this boring ASX 200 dividend share be a strong buy for its big yield?

Some ASX shares are exciting because they are chasing fast growth, new technology, or a major turnaround.

Others are far less exciting.

That is how I would describe Amcor plc (ASX: AMC). It makes packaging. That may not sound like the most thrilling business on the ASX 200, but boring can be useful when it comes with a large dividend yield and defensive demand.

Amcor shares have fallen around 25% over the past 12 months. At the current share price of $53.88, I think income investors may want to take a closer look.

A big dividend yield

According to CommSec, the consensus estimate is for Amcor to pay dividends per share of $3.62 in FY26.

Based on the current share price of $53.88, that would represent a forward dividend yield of approximately 6.7%.

The forecast dividend is then expected to ease to $3.23 per share in FY27 and rise slightly to $3.30 per share in FY28. That would still imply forward yields of around 6% and 6.1%, respectively, based on today’s share price.

Those are large yields in my view.

Of course, estimates can change. Dividends are never guaranteed, and Amcor’s distributions are unfranked, which may reduce the appeal for some Australian income investors compared with fully-franked ASX dividend shares.

But even after allowing for that, I think the forecast income looks attractive.

Defensive packaging demand

The second reason I think Amcor is an interesting ASX 200 dividend share is the nature of its business.

Amcor makes packaging and dispensing products used across areas such as food, beverages, healthcare, nutrition, beauty, wellness, and consumer goods.

That is not a glamorous business, but it is tied to everyday demand.

People still eat, drink, take medicine, buy household products, and use personal care items in weaker economic periods. That does not make Amcor immune to volume pressure, customer changes, input costs, or currency movements. But it does mean the company is exposed to categories that can be more resilient than many discretionary sectors.

The recent quarterly update showed the business facing some challenges, including lower volumes and the impact of the Middle East conflict on cash flow expectations. But it also showed the benefits of scale following the Berry acquisition, with higher adjusted earnings and ongoing synergy delivery.

I do not think investors need to obsess over one quarter. The more important point is that Amcor is a very large global packaging business with customers across essential product categories.

The sell-off may have created value

The third reason is valuation.

A 25% share price fall can be a warning sign. It may signal that investors are worried about debt, integration risks, weaker volumes, or the outlook for cash flow.

Those risks are worth taking seriously, particularly after a large acquisition. Amcor needs to keep delivering on integration benefits while protecting its balance sheet and still funding dividends.

But a lower share price also means the dividend yield has become much more attractive, as I discussed above.

This is where I think the business’ boring nature could actually work in shareholders’ favour. Amcor does not need to become the next market darling to produce a solid return. If it can keep generating cash, deliver merger benefits, and support a healthy dividend, investors buying today could be well rewarded as sentiment slowly improves.

Foolish Takeaway

I would not call Amcor a perfect ASX 200 dividend share. The dividend is unfranked, volumes are not especially strong, and the Berry integration still needs to be handled well.

But I do think it could be a strong buy for investors seeking a big yield from a defensive global business.

The share price fall has made the income case much more appealing. And while packaging may never be exciting, that is not really the point. Sometimes, a boring business with a large dividend yield is exactly the kind of share worth paying attention to.

The post Could this boring ASX 200 dividend share be a strong buy for its big yield? appeared first on The Motley Fool Australia.

More reading

• 3 excellent ASX dividend shares for income investors to buy in May
• Should investors buy low on these ASX shares hitting 52-week lows?
• Why did this broker just lower its price targets on these ASX shares?
• Should you buy Amcor shares for the 7% dividend yield?
• What does Macquarie say Amcor is worth after this week’s quarterly?

Motley Fool contributor Grace Alvino 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 positions in and has recommended Amcor Plc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.