If you're on the lookout for a combination of strong gains and a big dividend yield, then Super Retail Group Ltd (ASX: SUL) shares could be the answer.
That's the view of analysts at Morgans, which are feeling very positive about the ASX 200 retail stock.
Why is Super Retail an ASX 200 retail stock to buy?
According to a note from last month, the broker was pleased with the company's performance during the first half of FY 2024. It said:
The strength of Super Retail Group's (SUL) portfolio was apparent in a strong 1H24 result in which sales increased 3% despite cycling strong comps.
The broker also highlights that the company is outperforming the competition, such as fellow ASX 200 retail stock JB Hi-Fi Ltd (ASX: JBH). It adds:
In our opinion, the business is outperforming the competition across most of its retail operations as it leverages its brand equity, strong omnichannel credentials, well subscribed loyalty programmes and extensive network of stores.
The good news for income investors is that Morgans believes this outperformance will put Super Retail in a position to declare a special dividend in FY 2024. The broker explains:
PBT was down only (5)% compared, for example, with JB Hi-Fi's (20)% decline. Although there is some work to do at rebel, in particular, we believe SUL will continue to deliver strong returns and remains likely to declare a special dividend in August.
Morgans has pencilled in fully franked dividends per share of 96 cents in FY 2024. Based on the current Super Retail share price of $14.75, this equates to a 6.5% dividend yield.
Big gains ahead
As I mentioned above, the broker is also tipping big returns from the ASX 200 retail stock.
It currently has an add rating and $17.50 price target on its shares, which implies potential upside of approximately 19% for investors.
Throw in the potential dividends and you would have a total return of over 25% if Morgans is on the money with its recommendation.
