Key points
- ASX dividend shares can be very effective at boosting investment income
- Adairs is a retail stock that sells homewares and furniture. Rolling out more stores and increasing online sales are key strategies
- GQG is steadily growing its FUM and has committed to a fairly high dividend payout ratio
ASX dividend shares could be an excellent place to look for income for investors wanting to boost their investment yield.
When a share price drops, it can have the added bonus of increasing the prospective dividend yield for investors that buy shares.
The recent ASX share market correction could make these two options very attractive for dividends
Adairs Ltd (ASX: ADH)
Adairs is a retail stock that sells a wide range of furniture and furnishings. It has the Adairs network of stores, but it also has online furniture business Mocka, and also Focus on Furniture after making an acquisition.
The business is working hard at ensuring customers can buy however they want to – online or in-store. It has recently invested in a new national distribution centre which is expected to save costs as well as being able to ensure it can fulfil orders faster and provided stores with better stock flow.
Another of the ASX dividend share's key profit-boosting tactics is to open more large-format stores. They are substantially more profitable than smaller ones as it allows the company to sell more of its products in a single location. An upsized store is approximately 60% more profitable according to Adairs.
With Focus, Adairs also has plans to roll-out a national store network, expand its product offerings and grow online sales. It also increases Adairs' exposure to the 'bulky furniture' category.
It's currently rated as a buy by Morgans with a projected grossed-up dividend yield of 8.3% in FY22 and 11.4% in FY23.
GQG Partners Inc (ASX: GQG)
GQG is one of the largest fund managers on the ASX. It is a US-based fund manager, though it does have ambitions of growing funds under management in different places like Australia.
This fund manager offers a few different investment strategies such as US share funds, international share funds and dividend share funds.
One of the main ways that GQG Partners, and any fund manager, can grow profit, is by growing funds under management (FUM). On 30 September 2021, the FUM was US$85.8 billion. By 31 December 2021, FUM had grown to be $91.2 billion. In the three months to December 2021, quarterly net inflows were US$3 billion.
The ASX dividend share seeing business momentum across multiple geographies and channels. Its recently launched strategies and products continue to achieve "strong adoption".
Not only are GQG's management fees lower than many active fund managers, but its management fees comprise the vast majority of its net revenue, as opposed to performance fees.
The management team is "highly aligned" with all shareholders as the largest shareholders in GQG. Management are "acutely focused on and committed" to GQG's future.
It's currently rated as a buy by Morgans, with a price target of $2.40. The broker thinks it has compelling long-term potential with solid earnings.
The broker projects that GQG will pay a dividend yield of 7.4% in FY22 and 8.6% in FY23.
