I already own many ASX dividend shares in my share portfolio. But one sector that I've hit a number of foul balls on has been ASX retail shares.
I'm hoping that my next retail stock will turn the tide here. That's why I'm considering an investment in Premier Investments Limited (ASX: PMV) shares in 2024.
Retail stocks seem to be my kryptonite. I've invested in quite a few over the years, with names like Adairs Ltd (ASX: ADH) and Dusk Group Ltd (ASX: DSK) joining my portfolio at one point or another. But alas, most of these investments have turned out to be dividend traps to varying degrees.
The dividends from Adairs shares have declined dramatically over the past 18 months – largely thanks to the company's decision to scrap its final dividend for 2023 entirely.
Similarly, with Dusk stock, the company's total of 11 cents per share in payouts last year was a shadow of the 20 cents per share investors enjoyed over 2022.
But I have far more confidence in Premier Investments shares.
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Why I'm considering Premier Investments shares for my next dividend buy
Why? Well, firstly, this company has a better recent track record with doling out dividends.
Not only did Premier Investments deliver its highest-ever payouts last year (totalling $1.14 in ordinary dividends per share and handily beating its 2022 output of 92 cents per share), but it also lavished 41 cents per share in special dividends on investors.
Today, these dividends give Premier shares a trailing dividend yield of more than 4%. That comes fully franked too.
In other words, Premier is showing strength, while other ASX retail stocks are displaying weakness.
Secondly, this company has shown that it is able to rely on its diverse portfolio of retailers to deliver returns to shareholders. Premier owns the Smiggle, Jay Jays, Just Jeans and Peter Alexander retail chains. These are some of the best-performing brands in the country. I'm sure many readers can personally attest to it, given Christmas is still a fresh memory.
Last September, the company told shareholders that its retail earnings for the 2023 financial year rose by 6.4% to $357.9 million. Sales at Peter Alexander and Smiggle were up 11.8% and 22.4%, respectively.
Keep in mind that this occurred over a year of tough economic conditions. Consider the high inflation and rising interest rates that FY2023 was burdened with.
Thirdly, Premier Investments' chair Solomon Lew is widely considered to be one of the country's best business operators. He has been at Premier for decades and has an established track record of delivering outstanding results for investors over long periods of time.
So all in all, I think Premier Investments is one of the best ASX retail shares on the market today and is worthy of a spot in any ASX dividend share portfolio. Hopefully, it will be in my own before too long.
