2 ASX dividend shares under $2 to buy for passive income

Both these ASX retail shares pay fully franked dividends, meaning investors may be able to hold onto more of their passive income at tax time.

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Looking for ASX dividend shares to add some handy passive income to your earnings?

Below we look at two high-quality, high-yielding ASX shares that are currently trading for under $2.

Both ASX shares pay fully franked dividends, meaning investors may be able to hold onto more of that passive income come tax time.

And please note that future dividend payments may be higher or lower than past payments based on numerous company-specific and macroeconomic factors.

With that said…

This ASX share just delivered record passive income

Up first we have Accent Group Ltd (ASX: AX1).

Accent is a footwear and clothing retailer. It owns and operates more than 760 stores across Australia and New Zealand, including The Athlete's Foot and Saucony.

Currently trading for $1.69 a share, this ASX dividend share is up 24% in 12 months.

Based on the most recent results, Accent has, so far, proven resilient to any cutbacks in consumer spending in the currently high inflation and rising interest rate environment.

At its half-year results, the company reported a 39% year-on-year increase in total sales, which reached $825 million. And net profit after tax (NPAT) rocketed 290% to $58 million.

As for passive income, the ASX share declared an all-time high, fully franked interim dividend of 12 cents per share, up a whopping 380%. Eligible shareholders will have seen that land in their bank accounts on 9 March.

Accent also paid a final dividend of 4 cents per share on 15 September, bringing the full-year payout to 16 cents per share.

At the current share price, that equates to a fully franked trailing yield of 9.5%.

Bell Potter counts among the brokers with a positive outlook on this ASX dividend share.

Bell Potter has a buy rating and a $2.80 price target, implying a potential 63% upside from the current share price.

On the passive income front, the broker forecasts fully franked dividends per share of 16.1 cents for FY 2023 and 11.9 cents in FY 2024.

Which brings us to…

Potentially good value after a large retrace

The second ASX dividend share to consider buying for passive income is Adairs Ltd (ASX: ADH).

Adairs is a homewares and home furnishings retailer, with more than 170 stores in Australia and New Zealand, including Adairs, Mocka, and Focus on Furniture.

Currently trading for $1.62 a share, the Adairs share price is down a sharp 30% in 12 months.

While it's managed to continue delivering passive income, Adairs has clearly not escaped the fallout from the cost of living pressures mentioned above.

As you can see in the chart above, much of the share price losses came in early June.

That's when the company reported a steep deterioration in its trading conditions. This saw second-half sales fall 3.4% for Adairs, 10.9% for Focus on Furniture, and 23.8% for the Mocka online segment (year on year).

Still, management highlighted that:

Group gross margin for 2H FY23 remains in line with plan and is expected to be ahead of 2H FY22. Group inventory has been well managed and will finish below December 2022 levels.

And as Motley Fool analyst Tristan Harrison pointed out:

The ASX dividend share has seen gone through some bad falls before, but I think its long-term expansion plans will help it perform.

It wants to grow the Focus on Furniture network number while moving some Adairs store locations to larger footprints, which tend to be much more profitable than smaller stores.

As for passive income, Adairs paid a fully franked interim dividend of 10 cents per share on 23 September. The retailer paid a final dividend of 8 cents per share on 6 April, for a full-year payout of 18 cents per share.

At the current share price, that equates to a fully franked trailing yield of 11%.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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 Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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