Although the outlook for interest rates is improving by the week, it looks likely to still be some time before rates are at a level that makes savings accounts or term deposits better options than dividend shares.
For example, according to the most recent weekly economic report from Westpac Banking Corp (ASX: WBC), its economists expect the cash rate to be 1.5% at the end of 2023. That’s much better than 0.1% currently, but still a long way from traditional levels of 4% to 5%.
In light of this, the following dividend share could be a good option for income investors for the time being. Here’s what you need to know about Accent Group Ltd (ASX: AX1).
Why Accent shares?
This footwear retailer could be a good option for income investors right now. Especially with the Accent share price down by almost 50% from its 52-week high.
This share price weakness has been driven by a decidedly poor half year result from Accent last month. Though, it is worth noting that this was outside the company’s control and caused entirely by COVID headwinds. Accent revealed that at times through the months of July to October, more than 55% or 400 of its 700 stores were required to close due to government mandated lockdowns.
The good news is that with COVID restrictions easing and life returning back to normal, Accent looks well-placed to bounce back strongly in FY 2023. It is for this reason that Bell Potter thinks investors should take advantage of its pullback.
It commented: “Notwithstanding COVID impacts on recent trading, we believe AX1’s core business remains strong with all growth levers intact. Valuation also remains undemanding.”
Bell Potter currently has a buy rating and $2.75 price target on the company’s shares. Based on the current Accent share price, this implies potential upside of 69% for investors over the next 12 months.
As for dividends, the broker has pencilled in a fully franked dividend of 5.8 cents per share in FY 2022 and then 10.9 cents per share in FY 2023. Based on the current Accent share price of $1.63, this will mean yields of 3.55% and 6.7% respectively.
The post Broker tips this ASX dividend share to rise 69% and offer a generous yield appeared first on The Motley Fool Australia.
Should you invest $1,000 in Accent right now?
Before you consider Accent, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Accent wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of January 13th 2022
More reading
- Why is the Accent (ASX:AX1) share price further sliding today?
- 3 ASX retail shares slumping to 52-week lows today
- What’s the outlook for ASX retail shares like Kogan (ASX:KGN)?
- 2 cheap ASX dividend shares analysts rate as buys
- Analysts name 2 top ASX dividend shares to buy
Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. 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 Accent Group and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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