Key points
- ASX dividend shares could be useful for income, particularly after the recent drop in the market
- Adairs is an expanding homewares and furniture retailer that is priced cheaply and expected to pay a big dividend
- Soul Pattinson is an investment conglomerate that has the longest-running streak of dividend growth
The ongoing ASX share market volatility may present income-focused investors with the ability to buy ASX dividend shares at a cheaper price and with a higher dividend yield.
When share prices fall, it means that the prospective dividend yield is larger for new investors.
Whilst there's more to consider about a business than just its yield, it could be a useful time to consider these two ASX dividend shares:
Adairs Ltd (ASX: ADH)
Adairs is one of Australia's leading retailers of furniture, homewares and furnishing.
It's currently rated as a buy by a few different brokers including UBS and Morgans. Their most recent thoughts came after the recent trading update which was for the period where there were lockdowns and supply chain impacts affecting the business.
However, UBS reckons that these impacts are only short-term problems and the business can come through the problems. Store trading days were reduced by around 31% in the 26 weeks ending 26 December 2021. Stock flow from Asia remains inconsistent because of factory and shipping capacity disruptions across the region. It has faced challenges with its own supply chain with its new distribution centre and workforce shortage.
However, the ASX dividend share has plans to grow profit in a number of ways with its national distribution centre which is expected to reduce, upsizing selected stores, expanding its range, adding to its omnichannel capabilities and integrating Focus into the business.
Morgans thinks the Adairs share price is valued at 8x FY23's estimated earnings with a projected FY23 dividend yield of 12.4%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Pattinson is a very old investment conglomerate which has been listed for over 100 years, though it started off as just a pharmacy business. It has paid a dividend every year since 1903.
The business has built a diversified portfolio of assets that, combined, provide the ASX dividend share with a fairly consistent and defensive source of investment income.
Some of its investments includes listed businesses like: TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Pengana Capital Group Ltd (ASX: PCG), Pengana International Equities Ltd (ASX: PIA) and Bki Investment Co Ltd (ASX: BKI).
Soul Pattinson also has unlisted investments including resources, agriculture, financial services and swimming schools.
It has managed to grow its dividend every year since 2000, which is the record for consecutive years of dividend increases.
The company is steadily diversifying its portfolio away from its main, long-term investments. Soul Pattinson is looking at opportunities like the energy transition, global shares, education, health and ageing, 'real assets', financial services and agriculture.
Soul Pattinson has a trailing grossed-up dividend yield of 3.3%.
