Believe it not, retailers have emerged as a top-performing sector amidst the coronavirus pandemic. Many retailers have leveraged the tailwinds of online shopping while traditional brick-and-mortar stores have also performed well. The recent strength of retailers could make it the best sector for ASX dividend shares.
With that in mind, here are 3 ASX dividend-paying retail shares that are worthy of a place on your watchlist.
1. Shaver Shop Group Ltd (ASX: SSG)
The Shaver Shop previously cancelled its proposed FY20 interim dividend of 2.1 cents per share following concerns over the impact of COVID-19. However, during this time the company has seen its online sales channel surge 164%. In 2H20, online sales now represent almost 32% of total sales. Its strong sales growth has given the company the confidence to announce a special dividend equivalent to the dividend previously announced and cancelled. This represents a dividend yield of approximately 6.20%.
2. Nick Scali Limited (ASX: NCK)
Nick Scali responded to showroom closures by launching its first-ever digital offering, allowing customers the opportunity to purchase the entire range of its products via digital channels. To date, the company has experienced a significant rebound in customer activity in May and June. Given the strong trading, it expects sales orders for the months of May and June to be up 54% on prior corresponding periods, driven by the easing of government restrictions and a reallocation of discretionary consumer spending towards furnishings and homewares. The company currently pays a dividend yield of 6.73%.
3. JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi is, by all means, a leader in the consumer electronics, white goods and appliances space. The business has seen strong sales growth in 2H20 in JB Hi-Fi Australia and the JB-owned The Good Guys, as customers spend more time working, learning and enjoying entertainment at home. Its New Zealand business was more significantly impacted by temporary closures and strict government restrictions. While the stores have resumed full trading, sales are still down year on year. The company estimates that after the New Zealand impairment, its net profit will grow between 20% to 22% on FY19. JB Hi-Fi shares are currently yielding 3.57%.
ASX retailers have recovered swiftly following the tailwinds created as a result of COVID-19. These businesses are seeing strong cash flows as consumer behaviour shifts to spending more time at home. With increasing concerns of a second wave in Australia, I believe this recent trend in consumer behaviour is likely to continue. While I wouldn’t consider retailers as a long-term ASX dividend share, they are doing all the right things today, making them a very solid short–medium-term investment for dividends.
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Returns As of 6th October 2020
Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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