There are a lot of options for income investors on the Australian share market.
One ASX stock that could be among the best options out there for dividends is Accent Group Ltd (ASX: AX1).
It is the footwear-focused retailer behind a growing stable of store brands. These include Hype DC, Platypus, Sneaker Lab, and The Athlete's Foot. It is also licensed to sell Dr Martens, Hoka, Kappa, Skechers, Timberland, and UGG in Australia.
In addition, the company has recently expanded into apparel with the Glue Store and Nude Lucy brands.
At the last count, Accent operated 821 stores across these brands and was on track to open a further 70 stores during the first half of FY 2024.
Growing dividends from this ASX stock
Over the last decade, Accent has been growing its earnings and dividends at a consistently solid rate.
For example, back in 2015, the company paid out a fully franked 5 cents per share. Whereas in FY 2024, the team at Bell Potter is expecting more than double this at 11.1 cents per share.
Based on where this ASX stock currently trades, this would mean a fully franked 5.7% dividend yield for investors.
The good news is that Bell Potter expects an increase in FY 2025 and then again in FY 2026. For these years, it has pencilled in fully franked dividends of 13 cents per share and 15.6 cents per share, respectively. This will mean even more generous yields of 6.65% and then 8%.
Why is it a buy?
As well as a very attractive dividend yield, the broker likes this ASX stock due to its positive growth outlook. It explains:
Accent Group commands a dominant ~30% market share in the $3 billion Australian footwear retailing market, in addition to a broader opportunity given the expansion of its entry into the athleisure market.
We continue to view AX1 as a relative preference in our retail sector coverage given the company's scale and exposure in terms of channels, brands and size as the overall industry navigates a challenging retail spend environment in addition to growth adjacencies via exclusive partnerships with globally winning brands such as Hoka and growing vertical brand strategy (~8% on owned sales). 'We also view the current valuation as justified (~12x BPeCY24e P/E), considering the ~10% growth in the store network (BPe) through the current challenging trading environment to deliver a supportive medium term earnings growth trajectory.
