Although the JB Hi-Fi Limited (ASX: JBH) share price is having a decent start to 2023, things aren't quite as positive on a longer term basis.
For example, over the last 12 months, the ASX 200 retail giant's shares are down over 17%, as you can see on the chart below.
This has been driven by concerns that the cost of living crisis could weigh on its sales and earnings in the near term.
There is one positive with this decline, though. That positive is that it has made the potential dividend yield on offer with this ASX 200 stock very attractive.
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Should you buy this dirt cheap ASX 200 stock for its big dividend yield?
According to a recent note out of Citi, its analysts believe this is an ASX 200 stock to buy right now.
It has put a buy rating and $55.00 price target on its shares, which implies potential upside of 25% for investors based on the current JB Hi-Fi share price.
In addition, the broker is forecasting a fully franked $3.26 per share dividend in FY 2023, which represents a yield of approximately 7.5%.
What is the broker saying?
Citi acknowledges that JB Hi-Fi's earnings are likely to peak this year. This is due to its "view that household goods will be among the weaker retail categories given falling house prices and a rotation into travel spending."
However, it still believes this ASX 200 stock is dirt cheap at the current level. Particularly given its belief that consensus estimates may be too low.
Citi's analysts "continue to see upside risk to consensus expectations given the degree of decline expected in sales (~4%) and margins (~32%) in 2H23e appears inconsistent with the current trajectory of the business."
The broker is forecasting earnings per share of $4.95 in FY 2023, $3.66 in FY 2024, and then $3.49 in FY 2025. This implies below average price to earnings ratios of 8.9x, 12x, and 12.6x, respectively.
And while this is expected to lead to dividend cuts, the yields on offer are expected to remain very attractive. Citi is forecasting fully franked dividends per share of $2.41 in FY 2024 and then $2.30 in FY 2025. This will mean yields of 5.5% and 5.2%, respectively, for owners of this ASX 200 stock.
