ASX dividend shares can be a very useful way to grow an investor's passive income.
Businesses that pay a healthy amount of their profit out each year can offer attractive dividend yields.
I think that ASX blue-chip shares can provide good stability. But, I believe smaller ASX shares have more room to grow earnings and therefore boost the dividend over time.
With that in mind, I'd utilise the below two ASX dividend shares for passive income.
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Universal Store Holdings Ltd (ASX: UNI)
This is an ASX retail share that has retail businesses and wholesale businesses. Its core businesses are Universal Store and THRILLS. The business is also trialling the 'Perfect Stranger' brand as a standalone retail concept. Universal Store has around 80 stores.
In FY23, it could pay a grossed-up dividend yield of 7.4% according to Commsec. By FY25, it could be paying a grossed-up dividend yield of 9.7%.
Its brands are focused on on-trend apparel products for fashion-focused 16 to 35-year-olds.
FY23 has started strongly, with total group sales (excluding THRILLS) up 40.2% year over year. It opened three new stores before Christmas and it's planning to open another four to five new Universal stores in the second half of FY23.
The end of lockdowns could lead to a good boost of profitability in FY23 and beyond for the ASX dividend share, particularly as scale helps the business hopefully achieve higher margins. This could help it grow passive income for shareholders.
According to Commsec, the Universal Store share price is valued at 13 times FY23's estimated earnings.
Accent Group Ltd (ASX: AX1)
Accent is a shoe retailer that owns some brands and acts as the distributor for other brands. Some of those brands include The Athlete's Foot, Glue Store, Skechers, Dr Martens, VANS, CAT, Timberland, Hoka, Kappa and Nude Lucy.
The business has started FY23 strongly. In the first 18 weeks of FY23, total sales were up 52% year over year and the gross margin had improved by 570 basis points. It's also benefiting from the end of lockdowns. It was expecting to open around 50 stores in the first half of FY23.
With Accent's rebound in profitability, Commsec expects it to pay a grossed-up dividend yield of 7.4% in FY23. The grossed-up dividend yield might be 9.8% by FY25.
The company could be very good value. According to Commsec, it's priced at 15 times FY23's estimated earnings.
$100 per week of passive dividend income
Both of these names have a grossed-up dividend yield of 7.4%. Annualised, $100 per week is $5,200 per year. Investing the same amount in each ASX dividend share would need a total of $70,270 at the current share prices.
However, with the dividend growth predicted over the next couple of years, the total dividend income could grow to $6,851, which would be an average of over $130 per week by FY25.
