One oversold ASX 300 dividend share (with a 6% yield) to buy now

Here's why this ASX 300 dividend payer could be worth a look…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

To say that the Adairs Ltd (ASX: ADH) share price has been heavily sold off of late is a bit of an understatement.

Adairs shares have had a fairly depressing 18 months or so. Back in mid-2021, stocks in the company were flying, having just hit a new record high of almost $5 a share. Yesterday, the ASX 300 retailer closed at $2.80 a share. That's a plunge of more than 40% from those highs we saw just a year and a half ago:

But have Adairs shares been oversold? That's a very different question. Clearly, the market thought that they were oversold, given the recovery Adairs has embarked upon of late.

Back in June last year, Adairs shares hit a new 52-week low of $1.65 each. At the share price of $2.80 that the company closed at yesterday, Adairs is almost 70% above that low.

But are Adairs shares still oversold and thus have further room to climb?

A woman sits on sofa pondering a question.

Image source: Getty Images

Is ASX 300 retailer Adairs still undersold today?

Well, one ASX broker thinks so. As my Fool colleague James covered yesterday, Adairs has been rated as a buy by ASX broker Jarden. Jarden has given the homewares retailer a 12-month share price target of $3.28. That would give investors a further upside of 17% from today's pricing if realised.

Jarden liked what it saw in Adairs' annual general meeting last year, in which the company announced that its sales over the first four months of FY2023 were up by 7.6% compared to the same period in FY2022.

The broker is also expecting Adairs to jack its dividends back up over the next two financial years. Adairs forked out 18 cents per share in FY2022 (down from 24 cents in FY2021), which Jarden expects to be repeated in FY2023.

However, by FY2024, the broker reckons Adairs will be in a position to fork out 22 cents per share.

Today, Adairs has a trailing, fully franked dividend yield of 6.43%. But if the company does pay out 22 cents per share in FY2024, it would have a forward yield of 7.86% at the current share price. That could well make this ASX 300 dividend share worth buying at today's pricing.

Motley Fool contributor Sebastian Bowen has positions in Adairs. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Male hands holding Australian dollar banknotes, symbolising dividends.
Dividend Investing

3 companies to own for a dividend yield above 5%

If you're after secure income, these companies might fit the bill.

Read more »

Beautiful young couple enjoying in shopping, symbolising passive income.
Dividend Investing

3 buy-rated ASX dividend shares forecast to yield 5%+ in FY 2027

Brokers think these shares could be top picks for income investors.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

Buying Metcash shares? Here's the yield you'll get today

Metcash seemingly has a lot to offer investors right now.

Read more »

A group of businesspeople clapping.
Dividend Investing

Could this be the best ASX dividend share to buy now?

Bell Potter sees potential for 60% upside and a 6%+ dividend yield.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Dividend Investing

Targeting a dividend yield above 10%? Try these shares on for size

There are still some well-priced dividend plays on the ASX.

Read more »

Interchanging highways with light traffic.
Dividend Investing

How does an 11.8% dividend yield sound?

This company has just announced a big dividend increase.

Read more »

Hand of a woman carrying a bag of money, representing the concept of saving money or earning dividends.
Dividend Investing

2 ASX dividend shares with yields above 7%

I think these are great picks for passive income today…

Read more »

A couple working on a laptop laugh as they discuss their ASX share portfolio.
Dividend Investing

3 ASX dividend shares with bigger yields than CBA

Looking for a big yield? Here are three shares offering notably high yields.

Read more »