Should you buy Premier Investments shares before they trade ex-dividend next week?

Is this a retail share to buy for dividends?

If you want to snap up the upcoming Premier Investments Limited (ASX: PMV) dividend, then you'll have to move fast.

That's because this retail conglomerate's shares are due to trade ex-dividend next week.

A young woman looks happily at her phone in one hand with a selection of retail shopping bags in her other hand.

Image source: Getty Images

The Premier Investments dividend

Premier Investments released its full year results for FY 2022 all the way back in September.

For the 12 months, the company reported a 5.2% increase in sales to $1,497.5 million and a 10.1% jump in earnings before interest and tax (excluding one-offs) to $335 million.

This was underpinned by record Peter Alexander sales of $428.5 million and a 24.6% rebound in Smiggle sales to $261.2 million.

In light of this solid performance and its very strong balance sheet, the Premier Investments board declared a fully franked final dividend of 54 cents per share and a fully franked special dividend of 25 cents per share.

This took the Premier Investments dividend to 125 cents per share for the year, which was an impressive 56.3% increase year over year.

In order to receive the final and special dividends, investors will need to be on the company's share registry before its shares trade ex-dividend on Tuesday 10 January. On and after that date, anyone that buys Premier Investments shares will not receive the dividend payments.

Should you buy Premier Investments shares?

Buying an ASX share just to receive an upcoming dividend – a term called dividend stripping – is a risky strategy.

However, if you're interested in receiving its final and special dividends, which will provide a 3.1% yield, and holding its shares long into the future, then one leading broker would be supportive of this plan.

According to a recent note out of Macquarie, its analysts have an outperform rating and $29.00 price target on its shares.

Based on where Premier Investments shares are currently trading, this implies a return of almost 14% for investors over the next 12 months. And if you throw in the expected dividend payments between now and this time next year, the total potential return is closer to 19%.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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