The dividend income that is expected to be paid by the S&P/ASX 300 Index (ASX: XKO) share Accent Group Ltd (ASX: AX1) is very appealing.
Interest rates have jumped over the last year, bumping up how much income investors can get from ASX shares. But, I think that there are ASX 300 dividend shares that have such strong dividend yields that their yield is still very attractive.
Accent Group is one of those businesses with the potential for growth and good dividends, in my opinion.
It acts as the Australian distributor for a number of brands, and also owns others. Some of the brands involved are Vans, Skechers, Dr Martens, Glue Store, Henleys, Hoka, and The Athlete's Foot.
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How much dividend income could Accent shares pay in 2023?
Accent is expected to pay an annual dividend per share of 11.5 cents in FY23, according to Commsec.
At the current Accent share price, this suggests the grossed-up dividend yield could be 7.5% over the next 12 months. But, that's just an estimate.
The ASX 300 share is then expected to increase its annual dividend payment to 12 cents per share in FY24 and 13.7 cents per share in FY25.
That means the FY24 grossed-up dividend yield could be 7.8% and the FY25 grossed-up dividend yield 8.9%.
But, based on the earnings estimate for FY23, the company's dividend payout ratio could be a healthy 78%. The business would still be keeping a fifth of its profit to reinvest back into more growth opportunities.
Recent progress
On 25 January 2023, the business revealed that total sales (including The Athlete's Foot franchisees) for the 27 weeks to 1 January 2023 was $825 million, up 39%.
Earnings before interest and tax (EBIT) for the first half of FY23 is expected to be between $90 million and $92 million.
Management said trading conditions "continued to be very positive" in November and December, revealing that sales were higher than expected. There was also a year-over-year improvement in the gross profit margin.
Trading in January to the date of the announcement was in line with expectations.
Why I'd buy this ASX 300 dividend share
While the Accent share price has recovered some of the lost ground from 2022, it's still down around 20% from its November 2021 high.
I think the company's underlying profitability continues to improve as the business grows its store network and adds brands to its portfolio. The more it expands its reach to potential customers, the stronger position the shoe retailer is in.
At the current Accent share price, it's valued at under 15x FY23's estimated earnings and 14x FY24's estimated earnings. While it would have been better to buy a few months ago, I think it still looks good value for long-term growth, while paying a very good dividend.
