ASX dividend shares that provide investors with a good dividend yield and profit growth can give investors good total returns.
Passive income can be really attractive because it provides 'real' returns every financial period for shareholders rather than having to rely wholly on a share price rising.
With that in mind, I'm calling these two ASX dividend shares as income opportunities.
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Medibank Private Ltd (ASX: MPL)
Medibank is Australia's largest private healthcare insurer with two main brands – Medibank and ahm.
Despite its cyber attack incident late last year, Medibank revealed that during FY23, net resident policyholder growth was 0.6%, or 10,900 more in people terms. It also reported 39.9% net non-resident policy unit growth, or 78,400 policy units in actual terms.
It reported revenue increased 3.2%, group operating profit went up 9% to $647.5 million, and the annual dividend per share increased 9% to 14.6 cents. At the current Medibank share price, it has a trailing grossed-up dividend yield of 5.8%.
Further policyholder growth could be key to delivering profit and dividend growth for the ASX dividend share. In FY24, management is aiming to achieve resident policyholder growth of 1.5% to 2%. Certainly, Australian population growth can be a helpful underlying driver of shareholder returns simply because there will be more people who could take out a policy.
Estimates on CMC Markets suggest the ASX dividend share could pay an annual dividend per share of 16 cents per share in FY24 and 16.7 cents per share in FY25. This translates into forward grossed-up dividend yields of 6.4% and 6.7%.
Accent Group Ltd (ASX: AX1)
Accent Group is a large shoe retailer in Australia. It acts as the distributor for a number of brands including Timberland, CAT, Merrell, Kappa, Vans, Dr Martens, Skechers, Hoka, and Ugg. It also owns a number of shoe brands and retailers itself such as The Athlete's Foot, Glue Store, and Nude Lucy.
The business had a very strong FY23. Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased 39.6% to $298.2 million, earnings before interest and tax (EBIT) grew 122.9% to $138.8 million, and net profit after tax (NPAT) went up 181% to $88.7 million.
Those impressive numbers enabled the ASX dividend share to pay a full-year dividend of 17.5 cents per share. That's a grossed-up dividend yield of 11.6%.
Profit (and dividend) growth looks promising over the long term with the business growing its store numbers.
It's expecting to add 50 new stores in FY24, with a "significant further store roll-out opportunity in both its core banners and new businesses over the next five years". The company is particularly excited by the growth of Nude Lucy, as well as operational improvements, profit expansion, and digital sales growth.
In the first seven weeks of FY24, total sales were up another 2.8% (including wholesale) year over year, with total retail sales up 5%. Digital sales were up over 20%.
The short-to-medium-term may be challenging because of inflation and interest rate rises impacting customers. Even if profit and the dividend are hurt in FY24, FY25 looks very promising.
According to CMC Markets, the Accent share price is valued at under 15x FY25's estimated earnings with a projected grossed-up dividend yield of 8.7% for that financial year.
