Bell Potter has been running the rule over the retail sector this month and has picked out a number of its key picks.
Two ASX dividend shares that get the thumbs up from the broker are listed below. Here's why it thinks these could be top buys for income investors:
Accent Group Ltd (ASX: AX1)
This footwear retailer could be an ASX dividend share to buy according to Bell Potter.
It likes the company due to its dominance of the local market, which could become even stronger if it rolls out the Sports Direct brand across Australia. It said:
Accent Group commands a dominant ~30% market share in the $3b Australian footwear retailing market, in addition to a broader opportunity given the expansion into the athleisure market via its own brands. We continue to view AX1 as a key pick in our retail sector coverage given their scale as Australia's market leader, growth adjacencies in both footwear/apparel from exclusive partnerships & TAF channel conversion and growing vertical brand strategy led by Nude Lucy.
We also view the strategic investment by Frasers Group (FRAS) in AX1 (~15%) and the recent board appointment as a step forward to unlocking the sizable store roll-out opportunity of FRAS's core Sports Direct banner in Australia.
13.7 cents per share in FY 2025 and then 15.6 cents per share in FY 2026. Based on its current share price of $2.53, this would mean dividend yields of 5.4% and 6.2%, respectively.
Bell Potter has a buy rating and $2.75 price target on Accent's shares.
Premier Investments Limited (ASX: PMV)
Another ASX dividend share that is a key pick for Bell Potter is Premier Investments.
It is positive on the company due to its proposed demerger and the positive outlook for its highly profitable Smiggle and Peter Alexander brands.
The broker feels that things are so positive that these businesses deserve a re-rating. It explains:
In addition to Premier Investments' market share of ~6% in the apparel vertical and ~15% in the stationary space in Australia, the Smiggle brand is also a large player in the UK market. As the Smiggle brand looks to grow its presence in the Middle East & Indonesia via a low-risk wholesale model and Peter Alexander into the UK, we think the two brands have a long runway ahead.
With the divestment of the non-core Apparel Brands to Myer (MYR) in an all-script deal expected to be completed in January 2025, we see PMV retaining the higher margin Smiggle and Peter Alexander earnings base post-demerger. We view the highly profitable retail business with domestic:offshore exposure of 70:30 (BPe) growing at ~13% (BPe, FY26e), ~26% stake in Breville Group (BRG), together with property assets valued at cost and a strong cash balance (~$327m, BPe), as worthy of a re-rate in the multiple.
Bell Potter is forecasting fully franked dividends per share of 111.7 cents in FY 2025 and then 122.6 cents in FY 2026. Based on the current Premier Investments share price, this equates to dividend yields of 3.1% and 3.4%, respectively.
The broker has a buy rating and $38.00 price target on its shares.
