Do you have some money to invest into ASX dividend shares? There are some wonderful income ideas out there.
There are businesses that are generating both profit growth and paying good dividends. It can be really difficult to find decent yields with growth.
These two ASX dividend shares might be able to offer that attractive combination:
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Accent Group Ltd (ASX: AX1)
Accent is the leading Australian shoe retailer. It sells under a number of different brands including 4WORKERS, Hype, Dr Martens, Platypus, Timberland, VANS and Skechers.
The business is growing its sales in a few different ways. It is opening lots of stores – it's actually aiming to open 90 new stores in FY21. Accent is also growing its like for like store sales, which is driving organic growth, store like for like sales were up 2.7% in the first half of FY21. Online sales have grown particularly strongly over the last year. In HY21, total digital sales increased by 110% to $108.1 million.
It's this multi-pronged approach that is driving a significant increase of profit for the ASX dividend share.
Accent is benefiting from the strong retail environment, which is allowing it to expand its profit margins. The HY21 gross profit margin increased 140 basis points to 58.1%. Whilst sales only went up 6.6% to $541.3 million, the earnings before interest and tax (EBIT) grew 47.3% to $81.8 million and net profit after tax (NPAT) surged 57.3%.
Profit growth is a big part of what gives boards the confidence to keep increasing the dividend for shareholders. Accent decided to increase the interim dividend by 52.4% to 8 cents per share.
Accent CEO Daniel Agostinelli said:
With long-term objectives and incentives linked to driving at least 10% compound earnings per share (EPS) growth, Accent continues to be defined by strong conversion and the consistently strong returns it delivers on shareholders' funds.
In other words, Accent wants to be known for paying good dividends. It currently has a grossed-up dividend yield of 6.3%.
Adairs Ltd (ASX: ADH)
Adairs is one of the largest homewares and furniture retailers in Australia and New Zealand.
It's seeing similar retail trends as Accent. There has been good profit margin improvement, combined with excellent online sales growth. Adairs has revealed that there was a 124% increase in new online customers in the fourth quarter of FY20, compared to the fourth quarter of FY19. FY21 half-year Adairs online sales surged 95.2%.
But Adairs wants to engage with customers on multiple channels. This can lead to customers making purchases more often and spending more on each purchase than customers who only engage through one channel.
The ASX dividend share said that in FY20, the average active member who only shopped online spent $286 and the average active customer who only shopped in store spent $324. Active customers who shopped both in-store and online spent an average of $413 in-store and $318 online, for a total of $731.
The Adairs FY21 half-year result saw group sales increase 34.8%, underlying EBIT rise 166% and statutory net profit grew 233.4%. That translates to EPS of 25.9 cents. This funded an interim dividend of 13 cents per share.
The current trailing Adairs grossed-up dividend yield is 8.1%.
