The ASX dividend share Shaver Shop Group Ltd (ASX: SSG) may not be one of the most famous passive income stocks. But, in my view, it offers investors a significant number of positives.
Shaver Shop is one of the leading shaving product retailers in Australia and New Zealand, with its physical store network of well over 100 locations, its website and a presence on third-party marketplaces.
You may not think of a retailer as a strong ASX dividend share candidate for passive income, but I’m about to outline why it’s a compelling option.
Dividend yield
The first thing I want to highlight is, of course, the huge dividend yield of the business.
We can’t know what the FY26 annual dividend per share will be â that’s up to the Shaver Shop board of directors to decide in the coming weeks.
However, I do expect the annual dividend will be very similar â perhaps exactly the same â compared to the FY25 payout. The FY25 payout was 10.3 cents per share.
Therefore, at the time of writing, the business has a trailing grossed-up dividend yield of 11.1%, including franking credits. I believe the FY26 dividend will be very close to that level.
Payout stability
One of the main reasons why I’m confident that the business will deliver a stable (or higher) payout for investors is because the business has already demonstrated a track record of providing stability to investors.
Shaver Shop has not given shareholders a dividend payout reduction. The ASX dividend share started paying a dividend in 2017, increased its annual payout each year to FY23, maintained the payout in FY24 and hiked the dividend again in FY25.
We’ll see what happens in FY26, but there is breathing room with the dividend payout ratio. In FY25 it generated 11.5 cents of earnings per share (EPS) and cash EPS of 12.1 cents.
Earnings growth potential
The business is trading at a low price/earnings (P/E) ratio, even before taking into account the fact that it can grow earnings from its FY25 level.
According to the projection on CMC Invest, the business could generate EPS of 11.6 in FY26, 12.8 cents in FY27 and 14.1 cents in FY28.
Therefore, the ASX dividend share is trading at under 12x FY26’s estimated earnings and it’s projected to grow EPS by 21% between FY26 to FY28.
I think the business can grow its earnings through initiatives like store network expansion, gross profit margin improvement, online sales growth, more exclusive products from brands, expansion of its own brand Transform-U and potential product range growth in areas like oral health, hair care and beauty categories.
The post Is this ASX dividend share a buy for its 11% dividend yield? 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.