With interest rates tipped to fall later this year, many income investors are turning their attention back to dividend-paying shares.
Two companies have recently caught the eye of analysts at Macquarie for their attractive and growing income potential.
Let's take a look at two ASX dividend shares with strong outlooks and fully franked yields that income investors may want to keep on their radar. They are as follows:
Nick Scali Limited (ASX: NCK)
The first ASX dividend share that Macquarie is bullish on is Nick Scali. It is one of Australia's leading furniture retailers, known for its high-quality sofas and home furnishings.
Despite the tough retail environment, the company has continued to deliver solid margins and remains well managed with a strong balance sheet.
Speaking of margins, Macquarie expects "further GM% upside to be driven by Nick Scali products delivered to UK stores. Potential for further store openings in the UK would provide upside to current forecasts."
Macquarie expects this to underpin fully franked dividends of 54.1 cents per share in FY 2025 and then 66.2 cents per share in FY 2026. Based on its current share price of $16.36, this implies dividend yields of 3.3% and 4%, respectively.
The broker also sees plenty of upside potential for Nick Scali's shares. It has an outperform rating on them with a price target of $18.60. This implies potential upside of 14% over the next 12 months.
Universal Store Holdings Ltd (ASX: UNI)
Another ASX dividend share that gets the thumbs up from Macquarie is Universal Store.
It is a fast-growing youth fashion retailer that's carving out a loyal customer base across Australia. With strong brand recognition, a disciplined store rollout strategy, and market share gains, it is no wonder that Macquarie views Universal Store as a top buy.
And much like Nick Scali, the broker believes that gross margin improvements are on the way. It said:
Strong sales growth in 1H25, continuing into 2H25, with GM% expansion YoY and private label continuing to increase. UNI continues to win market share, with ongoing store roll-out supporting network sales growth.
As for income, Macquarie is expecting fully franked dividends of 33.8 cents per share in FY 2025 and 39.5 cents per share in FY 2026. Based on its current share price of $7.95, this equates to dividend yields of 4.3% and 5%, respectively.
Macquarie sees upside for its shares and has put an outperform rating and $9.25 price target on them. This suggests that they could rise over 16% between now and this time next year.
