2 ASX dividend shares that could be buys in September 2021

Adairs is one of the ASX dividend shares worth looking at.

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This article is about some ASX dividend shares that could be good ideas to think about in September 2021.

Businesses that are paying relatively high dividend yields may be options to boost the level of investment income from a portfolio.

Not every business has a high dividend yield. Also, just because a business has a high yield doesn’t automatically make it worth owning.

However, these two ASX dividend shares could be options:

Adairs Ltd (ASX: ADH)

Adairs is a leading home furnishings business that has a large store network as well as an impressive (and expanding) online presence with both its Adairs and Mocka brands.

Looking at the dividend, Adairs paid an annual dividend of 23 cents in FY21. That equates to a grossed-up dividend yield of 8.3% at the current Adairs share price.

According to Commsec, in FY23 it’s expected to pay an annual dividend of 26 cents per share, which is a grossed-up dividend yield of 9.4%.

Adairs says that store floor space is a key driver of store sales. Each square metre supposedly adds around $4,000 of store sales. It expects to add 8% of gross lettable area (GLA) in FY22 and then at least 5% per annum for the next five years after that with new and upsized stores.

Its linen lover membership program accounts for more than 80% of sales. Each new member adds around $400 to total sales. It’s aiming to continue to grow its linen lover membership by 10% to 15% per annum.

The number of customers shopping across both online and stores is 25% higher than FY19. Multi-channel customers are between 40% to 110% more valuable than store-only or online-only customers.

According to Commsec, the Adairs share price is valued at 10x FY23’s estimated earnings.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is one of the largest fund managers in Australia. In the latest disclosure, the ASX dividend share said that its funds under management (FUM) was $117 billion.

In FY21, Magellan paid an interim and final dividend per share totalling 199.7 cents – that was an increase of 8.2%. That came after a 9% increase in average FUM to $103.7 billion. FUM growth helped management and service fee revenue grow by 7% to $635.4 million, and profit before tax and performance fees of the funds management business grew 10% to $526.6 million.

However, a drop in performance fees led to the total dividend decreasing by 2% to 211.2 cents per share.

The ASX dividend share has been launching new products and investing in external businesses like Barrenjoey to diversify the business and add more earnings streams.

Magellan is currently rated as a buy by Morgans, with a price target of $54.85. Morgans is expecting Magellan to generate higher profit in FY22 and FY23.

Magellan’s FY21 annual partially franked dividend of 211.2 cents equates to a partially franked dividend yield of 4.85% today. Morgans predicts a FY23 dividend of $2.54 per share, which would be a (presumably partially franked) yield of 5.8%.

According to the broker, the Magellan share price is valued at 16x FY23’s estimated earnings.

Should you invest $1,000 in Magellan right now?

Before you consider Magellan, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Magellan wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Tristan Harrison owns shares of Magellan Financial Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. 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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