There are a group of ASX dividend shares that are expected to pay an income yield of more than 5% in FY22.
Some businesses have seen enormous levels of demand and profit generated in FY21 because of various effects of COVID-19. Those effects could change in FY22. So, it may be wise for investors to look beyond FY21 when thinking about what dividends could be paid.
The below two businesses are liked by analysts, have growth plans for the future and are expected to pay grossed-up yields of more than 5% over the next 12 or so months:
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JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi is one of the largest electronics and home appliance retailers in Australia and New Zealand. It has three segments – JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys.
FY21 has certainly been a bumper year for the business. Total sales increased 12.6% to $8.9 billion, with JB Hi-Fi Australia sales rising 12% to $5.96 billion, The Good Guys sales growing 13.7% to $2.7 billion and JB Hi-Fi New Zealand sales going up 17.4% to NZ$261.6 million.
Total FY21 earnings before interest and tax (EBIT) grew 53.8% to $743.2 million.
Shareholders may see another large FY21 final dividend increase from the ASX dividend share. In the FY21 half-year result, the interim dividend grew by 81.8% to $1.80 per share.
Credit Suisse, which rates JB Hi-Fi as a buy, thinks a more modest full year dividend will be paid in FY22 compared to FY21.
The broker is expecting FY21 to come with a full year dividend of $2.26 per share. That would translate to a forward grossed-up dividend yield of 6.6%.
JB Hi-Fi continues to invest in its digital offering to improve the service and experience for customers. This is helping get the product to customers quicker, as well as improving conversion rates. Improving the supply chain is another focus area. Becoming a leading supplier of products and services to commercial, government and education markets is also a target area for the company.
Nick Scali Limited (ASX: NCK)
Nick Scali is another ASX dividend share in the retail space.
It sells a selection of high-quality furniture pieces to households.
There has been an increase of spending by people on improving their homes. Nick Scali has been a beneficiary of this trend.
The first six months of FY21 saw a large increase in profit and the dividend. Underlying net profit doubled to $40.5 million, operating cashflow soared 222% to $53.5 million and the interim dividend was increased by 60% to 40 cents per share.
There are a number of areas where the business is targeting further growth.
The ASX dividend share wants to expand the store network across Australia and New Zealand, initially targeting 86 showrooms across both markets. Management said that recent store openings demonstrate continued appetite from consumers for a bricks and mortar offering. On 4 May 2021 it had 61 stores.
Nick Scali also has plans to launch into adjacent categories and increase the value proposition for customers.
Growing its e-commerce offering is a relatively untapped area. This will support store network growth and allow it to succeed in high volume categories with new product ranges.
The company is planning to grow by acquisition where it can see it can add "considerable value". It is seemingly on the hunt for the business Plush Sofas.
This ASX dividend share is currently rated as a buy by Citi. The broker is expecting Nick Scali to pay a dividend of just over 48 cents in FY22, equating to a forward grossed-up dividend yield of 5.5%.
