Two Affordable ASX Stocks with Over 9% Dividend Yields
Finding value on the ASX can sometimes lead to uncovering stocks with significant dividend yields. The combination of a low price-to-earnings ratio and a high dividend yield may signal attractive investment opportunities for income-seeking shareholders.
Company Overview: Adairs Ltd
Adairs Ltd, a familiar name in the retail sector for furniture and homewares, might be facing pressing times due to increased living costs affecting consumer spending. However, demographic growth suggests an untapped customer base that may fuel future earnings recovery. Strategy-wise, Adairs aims for profit growth by expanding its store network, enhancing existing store profitability, increasing online sales, and expanding its membership base.
- Forecasted Performance: Analysts project a potential earnings per share of 28.5 cents, with a predicted P/E ratio under 8x for FY26.
- Dividend Potential: Estimated annual dividends could reach 19.8 cents per share in FY26, translating to a 13.2% grossed-up yield.
Company Overview: Lindsay Australia Ltd
Transport and logistics player Lindsay Australia Ltd caters to sectors like agriculture and horticulture, offering a series of services from growing to distributing produce. Recent financial results show promising growth in revenue, EBITDA, and NPAT, leading to an increased interim dividend.
- Projected Growth: The company forecasts a 13% growth in full-year underlying EBITDA for FY24 compared to FY23.
- Valuation and Dividend: The earnings predictions hint at a P/E ratio of 6x by FY26 and a potential 9% grossed-up dividend yield.
Insights and Analysis
With the Australian economy reeling from various challenges, investors with an appetite for risk and a focus on dividends might find these stocks appealing. The key is to gauge whether the projected earnings and dividends are within reach, keeping in mind the companies’ potential to capitalize on future economic upswings.
Concluding Thought
Entering positions in high-yield dividend stocks requires confidence in the companies’ abilities to maintain and grow dividends. With Adairs and Lindsay Australia offering yields above 9%, they stand out as potential components of a dividend-focused portfolio, balancing the quest for value with the lure of income.