The ASX dividend stock Shaver Shop Group Ltd (ASX: SSG) could be a contender to pay the biggest passive income yield over the next 12 months.
If I wanted to receive as much dividend income as I could, Shaver Shop would be right at the top of my idea list.
An ASX retail share may not sound like an obvious candidate for a high-yielding, fairly dependable business. However, the last several years have shown that the business is capable of being a resilient dividend payer for income-focused investors.
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$880 of passive income
In both the 2024 and 2023 financial years, Shaver Shop paid an annual dividend per share of 10.2 cents. At the current share price, that translates into a grossed-up (including franking credits) dividend yield of 11%.
That means if an investor put $8,000 into this ASX dividend share today and Shaver Shop paid a dividend of 10.2 cents per share again in FY25, they would receive grossed-up passive income of approximately $880 in year one.
Shaver Shop grew its annual dividend every year between FY17 and FY23 and then maintained it in FY24. The company has shown a desire to provide investors with a large, stable (and rising) dividend.
Low valuation
Investors may be wondering how Shaver Shop is able to provide such a large dividend yield.
A key part of the equation is that the ASX dividend stock is trading at such a low valuation. The lower the price-earnings (P/E) ratio, the higher the dividend yield.
Shaver Shop generated 11.7 cents of earnings per share (EPS) in FY24, which means it's currently trading at less than 12x FY24's earnings. The board of the ASX dividend share decided on a dividend payout ratio of 87% for the 2024 financial year.
Potential to grow earnings in the future
Despite the difficulties of the current economic situation in Australia and New Zealand, I believe the company can continue paying a good dividend in FY25 and beyond.
For starters, in its recent annual general meeting (AGM) update, the business reported that its gross profit dollars generated were flat in the first four months of FY25, thanks to a stronger gross profit margin offsetting slightly lower sales.
The company says it's operating in an attractive and growing market, particularly with male grooming.
In FY25, it's looking to drive category and range expansion with new brands. For example, Silk'n and Epilady were expected to launch in November 2024.
I also like that the ASX dividend share is looking to optimise its store network to improve profit by relocating within centres, refitting to the latest brand standards, and selectively opening new stores.
I believe Shaver Shop can continue to grow its profit in the longer term, which will help fund more dividend growth.
