I think some ASX dividend shares have the potential to deliver solid shareholder returns in the coming years.
If a business pays a decent dividend then that ticks the investment income box.
But I'm also looking for companies with growth plans that can deliver growth and help drive the underlying value of the business from today's lower levels.
The volatility that the ASX share market has seen this year has given us the potential to buy many companies at a cheaper price. If the price of something drops 50% and then returns to its previous level, that represents a rise of 100%.
Here are some ASX dividend share ideas that I think could double in seven years and pay income along the way.
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Baby Bunting Group Ltd (ASX: BBN)
Baby Bunting is the country's largest retailer of products for babies and their families. It sells things like prams, car seats, clothes, furniture, toys and more.
It has a national network of stores in Australia. One of the main reasons I think that it can deliver a lot of growth is because it plans to grow its store network from 65 to 110 stores in Australia, as well as at least 10 in New Zealand.
Adding scale can help Baby Bunting grow its profit margins. It's also selling more private label and exclusive products, which come with a higher gross profit margin. In addition, the company can grow its online sales.
The company is also increasing its addressable market, meaning it will sell more products a child may need.
The Baby Bunting share price has dropped 55% in 2022, so I think it's a very good, contrarian time to look at the business.
According to Commsec, it could pay a grossed-up dividend yield of 9.3% in FY24.
Accent Group Ltd (ASX: AX1)
Accent is one of the largest shoe retailers in Australia. It is the distributor for a number of popular brands such as CAT, Skechers and Vans. It also owns some brands like Glue Store and The Athlete's Foot.
I think this ASX dividend share is one of the most promising retailers. It's also growing its store network at a pleasing pace. In FY18, it was operating 446 stores. By FY22, that number has climbed to 762 stores. In FY23, it's targeting 812 stores. I think this number can keep growing.
The company is growing sales of the brands it owns, which comes with a higher profit margin. Scale can also help increase profit margins for the business. There is also a long-term trend of the business growing its online sales.
If the ASX dividend share can keep growing its scale, adding strong brands to its portfolio and increasing profit, then it's on course for an attractive future.
At the current Accent share price, the company could pay a grossed-up dividend yield of 9.6% in FY24, according to Commsec. That looks like good value after dropping almost 34% in 2022.
Bailador Technology Investments Ltd (ASX: BTI)
Bailador is a company that invests in technology businesses. It has a portfolio of investments spread across different sectors, including healthcare and e-commerce.
It starts out looking for companies run by their founders that have been in operation for two to six years. They must have a "proven business model with attractive unit economics", international revenue generation, a "huge market opportunity", and the ability to generate repeat revenue.
Two of Bailador's long-term investments have listed on the ASX: Straker Translations Ltd (ASX: STG) and Siteminder Ltd (ASX: SDR), in which it still owns stakes.
Bailador says that it targets a 4% dividend yield of its pre-tax net tangible assets (NTA). At 30 September 2022, the NTA was $1.75 – 4% of this is 7 cents per share.
However, because the Bailador share price last traded at $1.28 (a 27% discount to the NTA), the current grossed-up dividend yield on the current NTA would be 7.8%.
