The ASX dividend share space is full of interesting names from a variety of sectors. While volatility has caused valuations to drop in many sectors, this could mean even bigger dividend yields because of lower share prices.
Nearly every investor has likely heard of names like Commonwealth Bank of Australia (ASX: CBA) and Fortescue Metals Group Limited (ASX: FMG). But, after recent runs of their share prices, the yields they're offing are seemingly a bit lower.
However, the below three names could be opportunities for both investment income and capital growth.
Metcash Limited (ASX: MTS)
Metcash is a business that supplies a wide range of independent liquor businesses and food retailers in Australia, including IGA. It also owns the hardware brands Mitre 10, Total Tools, and Home Timber & Hardware. In fact, it's the second-largest player in both liquor and hardware in Australia.
Even though the business is seeing ongoing growth across its segments, the Metcash share price is down more than 10% since the start of May 2022.
In FY23, for the 23 weeks to 9 October, total group sales were up 7.7%. Food sales were up 2.6%, or 5.7% excluding tobacco. Hardware sales were up 17.1%. Liquor sales were up 12%.
The ASX dividend share's sales were boosted by local neighbourhood shopping, improved competitiveness of independent retail networks, and inflation.
The business aims to pay "reliable dividends", with a dividend payout ratio of approximately 70% of underlying net profit after tax (NPAT). According to Commsec, Metcash is expected to pay a grossed-up dividend yield of 7.5%.
Baby Bunting Group Ltd (ASX: BBN)
Baby Bunting is the largest retailer in Australia specifically for babies and their families.
There are a number of areas the business is working on. It's investing in its e-commerce capabilities, trying to grow its market share from its core business, aiming to grow in new markets (including New Zealand), and improving its profit margins.
The ASX dividend share wants to expand its range, and grow its store network to at least 110 stores in Australia and at least 10 stores in New Zealand.
However, while total sales growth in FY23 to 7 October 2022 was 12%, the gross profit margin was down 230 basis points and net profit was down $3 million year over year. Competitor pricing is partly to blame, according to Baby Bunting, as well as an increase in costs.
In 2022 to date, the Baby Bunting share price is down more than 50%. In FY23, it's expected to pay a grossed-up dividend yield of 7.7% according to Commsec.
Accent Group (ASX: AX1)
Accent is a leading shoe retailer in Australia. It sells a number of different brands including Dr Martens, Henleys, Hoka, Kappa, Vans, and The Athlete's Foot.
The business is steadily growing its store network, which is increasing its scale and giving it the potential to sell more products.
The Accent share price has been rising in recent weeks. However, it's still down 33% in 2022 to date. This has had a significant impact on the share's expected forward dividend yield. Commsec numbers suggest the business will pay a grossed-up dividend yield of 8.3% in FY23.
A couple of weeks ago, the ASX dividend share announced that year-to-date sales were up 52%, while the gross profit margin was up 570 basis points (or 5.70%). It has focused on delivering full-price sales. The company is also expecting to open around 50 new stores in the first half of FY23.
