2 ASX dividend shares with large yields that have paid consistent payouts

JB Hi-Fi and Nick Scali are building their dividend records for shareholders.

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ASX dividend shares represented by cash in jeans back pocket

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There are some ASX dividend shares out there that have been growing their dividends for several years in a row.

The business with the longest dividend growth streak record is currently Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) that started in 2000.

But these two ASX retail shares started growing their dividend several years ago:

Nick Scali Limited (ASX: NCK)

Nick Scali is one of the largest furniture retailers in Australia with a national store footprint that is steadily growing.

Citi currently rates the business as a buy with a price target of $12.05 on the business. The broker points to continuing strength of Nick Scali sales with a good order book.

Nick Scali has a high gross profit margin and relatively fixed cost base leading to significant operating leverage on the back of sales growth.

The company points out that minimal growth capital expenditure is required for a showroom roll-out, allowing the company to grow whilst maintaining adequate liquidity for capital initiatives such as property purchases.

Those property purchases lead to reduced occupancy costs and increased the ‘defensibility’ of the store network in strategically important locations, according to management.

Nick Scali’s business model reportedly generates a leading retail industry operating cashflow margin, achieving average earnings before interest, tax, depreciation and amortisation (EBITDA) to cashflow conversion of over 100%.

The ASX dividend share says that the cashflow profile allows the company to maintain a high dividend payout ratio which has averaged 80% through time.

It has grown its dividend each year since 2013 and it currently has a trailing grossed-up dividend yield of 8.1%.

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is another retail business that has experienced a large increase in sales and profit during FY21 with all of the COVID-19 impacts.

The broker Credit Suisse has rated JB Hi-Fi shares as a buy with a price target of $57.39. That suggests a potential increase of the JB Hi-Fi share price of around 20% over the next 12 months.

JB Hi-Fi controls two major Australian retail brands. JB Hi-Fi is a leading retailer of technology and consumer electronics. The Good Guys is a leading retailer of home appliances and consumer electronics.

There are five unique competitive advantages that JB Hi-Fi believes it has: scale, a low cost operating model, quality store locations, supplier partnerships and its multichannel retail capability.

JB Hi-Fi says that it has the lowest cost of doing business of major Australian listed retailers and international consumer electronics retailers. It says that it has a productive floor space with high sales per square meter. JB Hi-Fi has a continued focus on productivity and minimising unnecessary expenditure. This allows it to offer consistently low prices and compete with all competitors, old and new. 

The ASX dividend share has grown its dividend each year since 2013. It currently has a trailing grossed-up dividend yield of 8%.

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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. 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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