Premier Investments Limited (ASX: PMV) shares could make a great first investment with $500. It's an S&P/ASX 200 Index (ASX: XJO) stock that offers investors a good dividend yield.
If I were looking to invest, I'd want to go for a business that could generate a good total return, through a mix of capital growth and income.
The ASX is a great place to find investment opportunities in my opinion, but the problem is that Australia doesn't have a very large population, so businesses can sometimes reach their growth limit fairly quickly.
But, the ASX businesses that are growing internationally could be ones to look at.
I think Premier Investments' global growth exposure makes it an attractive option to consider.
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Brand power
Premier Investments owns a number of different retail brands including Just Jeans, Jay Jays, Dotti, Peter Alexander and Smiggle. Many readers may already have heard of some of these names.
The ASX 200 stock also owns significant shareholdings of Breville Group Limited (ASX: BRG) and Myer Holdings Ltd (ASX: MYR).
Increased profitability for the ASX 200 stock
The business has managed to use the COVID-19 pandemic period to increase its profitability significantly.
On one hand, the company has managed to grow its percentage of online retail sales a lot compared to the pre-COVID times. Online sales come with a higher profit margin according to the company.
The ASX 200 stock also worked hard on changing its rental agreements to better reflect the situation for bricks and mortar retailing. A lower rent-to-sales ratio improves the profit margin for the business in its physical retailing as well.
Increased profitability normally helps investor sentiment and can help the Premier Investments share price.
International growth
Premier Investments is doing an excellent job at growing Smiggle, a business that sells school items (such as bags and pencil cases) with branded imagery on them, such as Marvel and Minecraft.
This offering appears to be very popular with kids and families around the world. Premier Investments said that in FY22, Smiggle generated $261.2 million of sales globally, which was an increase of 24.6% – Smiggle saw sales rise 61.7% in Australia and New Zealand, while Europe and Asia also saw growth return as school and tourism resumed.
The company noted that it developed new products with Disney studios, BBC studios and Universal Studios, as well as its very first sporting collaboration with the AFL.
The company's overall sales have continued to perform strongly in FY23 as it cycles against the last of the lockdowns globally.
What is the dividend yield on Premier Investments shares?
The ASX 200 stock could pay a grossed-up dividend yield of 5.4% in FY23 according to the estimate on Commsec.
In the coming years, I think the dividends could provide good returns and the growth of Smiggle could unlock further capital gains.
