The Amcor (ASX: AMC) share price has gone downhill since December 2022, falling close to 20%.
When an ASX dividend share falls in value, it can lead to a pleasing boost for the potential dividend yield. For example, when a business that's yielding 5% drops 10% in value, the dividend yield on offer becomes 5.5%, if the dividend payout stays the same.
In summary, with a lower valuation, investors can grab a slice of a business with a better dividend yield.
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What does Amcor do?
Amcor describes itself as a global leader in "developing and producing responsible packaging for food, beverage, pharmaceutical, medical, home and personal-care, and other products."
When we walk around a supermarket, plenty of the products that we see may well be packaged in one of Amcor's offerings. In some ways, it's a fairly defensive business because of how defensive the products it packages are.
It is truly a global player with a presence in North America, South America, Europe, the Middle East, Asia and the Pacific. It wasn't long ago that it became even bigger after acquiring the Bemis business in North America.
What's going wrong for the ASX dividend share?
A couple of months ago the business released its quarterly update for the period ending 31 March 2023.
Amcor noted that while it delivered 4% higher adjusted earnings in "comparable constant currency terms", it reported "continued softness and increased volatility in the demand environment leading to a modest 2.5% decline in adjusted earnings before interest and tax (EBIT) for the third quarter."
It said in May that it expected the market conditions to continue in the near term. The company also said that it's focused on continued initiatives to "recover inflation, drive cost productivity and advance previously announced structural cost reductions." It changed its outlook for FY23 to reflect the challenging operating environment.
What has this done to the dividend yield?
While forecasts may have changed, the business is expected to slowly grow its annual dividend per share over the next few years, with a total payment per share of 71.8 cents in FY23.
At the current Amcor share price, this translates into a forward dividend yield of 4.75%. That means that investors are getting a payment worth around 1.2% every three months.
By FY25, the company could be packing a dividend yield of 4.9% for investors.
Is this a good time to invest in Amcor shares?
For a long-term growing ASX dividend share like this one, it could be a wise move to invest while market sentiment is weak.
The Amcor CEO said that he has confidence that "earnings growth will build" as it progresses through FY24. Ron Delia also said:
We remain focused on executing our strategy for long term value creation, which includes reinvesting in the business for organic growth, pursuing acquisitions and/or regular share repurchases and returning cash to shareholders through a compelling and growing dividend.
As we can see, the company is looking to keep growing the dividend and it's doing a share buyback. This is increasing the underlying value of each share for shareholders, which is good news.
For a long-term, dependable ASX dividend share, I think this stock could be one of the good ones to consider, particularly as growing net sales should help with profit margins.
