The All Ordinaries (ASX: XAO), or All Ords ASX share, Best & Less Group Holdings Ltd (ASX: BST) could be one of the largest dividend yield payers in the coming years. By 2025, the grossed-up dividend yield might be 16%.
There are very few businesses that are expected to grow their dividend in the coming years to such a high level.
Sometimes ASX mining shares can pay very high yields when times are good like we've seen from BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) in the last few years.
But, with the fact that retailers do trade on a low price/earnings (P/E) ratio, it means that sometimes those dividend yields can become very high.
What does this ASX All Ords share do?
The business describes itself as a leading value apparel specialty retailer with an omnichannel sales network comprising 245 physical stores and an online platform.
Its aim is to be the "number one choice for mums and families buying baby and kids' value apparel in Australia and New Zealand through its two trusted brands: Best & Less (in Australia) and Postie (in New Zealand)."
Dividend projection for Best & Less shares
Commsec numbers suggest that Best & Less is going to pay an annual dividend per share of 18.1 cents in FY23, which would equate to a grossed-up dividend yield of 12.6% at the current Best & Less share price.
In FY25, it's projected to pay an annual dividend per share of 22.7 cents per share. This would be a grossed-up dividend yield of around 16%.
Why is the dividend yield so high? According to Commsec numbers, Best & Less is valued at under 9 times FY23's estimated earnings and 6 times FY25's estimated earnings.
Will it be able to grow earnings?
I think a key part of being a good ASX dividend share is growing earnings over time so that it's more likely to be able to fund the current dividend and achieve dividend growth.
The All Ords ASX share is planning to accelerate its investment online, including a new customer data platform, a new mobile app and a consumer website. It's also reviewing its core planning, merchandising and finance systems.
The business is working on a number of growth priorities:
Continued market share growth in baby, kids and womenswear, achieving above market online sales growth and enhancing the store network, underpinned by supply chain transformation.
It's planning to open six new stores in the second half of FY23. This can help FY24 earnings and beyond as the stores mature.
The business is seeing a return to supply chain stability, which will hopefully help its inventory positioning.
Foolish takeaway
While there may be some volatility ahead, I think this retailer can do well in the coming years, particularly if more shoppers look for good-value clothing. This could then help the business fund those huge projected dividends.
