The Dusk Group Ltd (ASX: DSK) share price could be a leading ASX dividend share for investors to sniff out.
For readers that haven't heard of this one before, it describes itself as a specialty retailer of home fragrance products, offering a range of Dusk-branded "premium quality products at competitive prices". It sells things like candles, ultrasonic diffusers, reed diffusers, essential oils and fragrance-related homewares.
Its products are designed 'in-house' and are exclusive to Dusk.
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Why is the ASX dividend share's yield so high?
According to Commsec estimates, the business is expected to pay an annual dividend per share of 16.7 cents in FY24.
At the current Dusk share price, this translates into an FY24 grossed-up dividend yield of around 12%.
While FY25 is further out, it may be worth noting that the dividend estimate for FY25 is 20.4 cents per share. This would be a grossed-up dividend yield of 14.6%. But, at this stage, that's just a distant projection.
I'd put the high dividend yield down to two or three things.
Firstly, the Dusk share price has dropped by around 33% over the past year. A lower share price has the effect of boosting the dividend yield.
Next, the ASX dividend share is valued at a low multiple of its earnings. According to Commsec, the Dusk share price is valued at 8 times FY24's estimated earnings.
I'd also put the high dividend yield down to the fairly high dividend payout ratio. It's forecast to have an FY24 dividend payout ratio of 68%.
Positives about the business
Dusk says that its vertical retail model provides flexibility and control. The company reportedly has over 750,000 members.
Management believes that the company has a compelling customer proposition, with affordable luxuries. Around 30% to 40% of sales are gifting.
One of the most promising aspects of the ASX dividend share, according to Dusk, is its growth in high margin consumables.
In the first 19 weeks of FY23, total sales were up 23.9% year over year. It said it opened five new stores in time for Christmas and it expects to open another three or four in Australia in the second half.
Management also said it's likely that the company will open more stores in New Zealand if trading continues to meet expectations.
