Premier Investments Limited (ASX: PMV) shares are trading for $26.83 on Tuesday, up 0.47%.
ASX retail shares like Premier Investments have been volatile over the past 12 months, as investors fretted over high interest rates and inflation and the degree to which consumers would pull back on spending.
Premier Investments, the name behind popular retail brands like Just Jeans, Peter Alexander, and Smiggle, certainly experienced this volatility with its share price on a rollercoaster last year, as shown below.
Despite the economic uncertainty, the full-year performance of ASX retail stocks last year was actually surprising.
Over the year, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) rose by 18.7%.
Retail shares outperformed the S&P/ASX 200 Index (ASX: XJO) by a mile, with the benchmark rising by only 8.13% in comparison.
Meantime, the Premier Investments share price booked an 11.1% gain over the year.
Why did consumers keep spending in 2023?
Analysts speculated that low unemployment and higher spending among older debt-free Australians kept consumer discretionary spending stronger than anticipated in 2023.
Also, many households had a savings build-up of pandemic stimulus money that provided a buffer against the rising cost of living.
On top of that, property prices rose strongly last year. This creates a psychological 'wealth effect' whereby people feel richer when their homes rise in value, and thus, they are more likely to spend at the shops.
The big question is whether this retail resilience will continue in 2024. Those household savings are running out, and property price growth is expected to slow this year.
Plus, the Westpac-Melbourne Institute consumer confidence survey released this week found sentiment had fallen to the lowest level recorded for the first month of a new year since the 1990s recession.
So, are we yet to see the full impact of this cost-of-living crisis on retail businesses? Or will the prospect of cuts to interest rates prevent a downward spiral in retail earnings and a hit to dividends?
These are the questions that income investors may ponder before buying ASX retail shares in 2024.
Meantime, let's take a look at Premier Investments shares and the dividend expected in 2024.
How much passive income will Premier Investments shares pay in 2024?
As published today on CommSec, the consensus forecast dividend for Premier Investments shares in 2024 is $1.21 per share.
This is down on the FY23 dividend of $1.30 per share and the FY22 dividend of $1.25 per share.
Let's see how this translates for ASX investors purchasing $10,000 worth of Premier Investments shares at today's price.
An investment budget of $10,000 (minus a brokerage fee of $5) buys you 372 Premier Investments shares at a total cost of $9,980.76.
If we multiply 372 by $1.21, we get a total annual dividend of $450.12, plus 100% franking.
The gross dividend, including the franking, equals $643.
On a purchase price of $26.83 per share, that brings the dividend yield to just over 4.5%.
If we add franking, the gross dividend yield comes in at just over 6.4%.
That means Premier Investments shares will still pay an above-average dividend yield this year.
The long-term average dividend yield for an ASX 200 stock is 4%.
