Top broker tips 17% upside for this quality ASX 200 dividend stock

A top broker expects more outperformance in 2025 from this surging ASX 200 dividend stock.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Looking for an S&P/ASX 200 Index (ASX: XJO) dividend stock paying a solid, reliable yield with the potential for some significant share price gains in the months ahead?

Then you may wish to run your slide rule over electronics retailer JB Hi-Fi Ltd (ASX: JBH).

Despite dipping 0.5% in intraday trade today to $94.77 a share, the JB Hi-Fi share price is up a benchmark-smashing 48.3% over 12 months.

Atop those gains, JB Hi-Fi also paid out $3.53 a share in fully franked dividends to eligible stockholders over the year.

At the current share price, that sees this quality ASX 200 dividend stock trading on a 3.7% fully franked trailing yield.

And according to Macquarie Group Ltd (ASX: MQG), there could be more outperformance to come.

Woman checking out new iPads.

Image source: Getty Images

ASX 200 dividend stock in the technology sweet spot

In Macquarie's March small and mid-cap ASX stocks best picks list, analyst Caleb Wheatley gives JB Hi-Fi shares an outperform rating. Macquarie has a $111.00 price target on the ASX 200 dividend stock, representing a potential upside of just over 17% from current levels.

Noting that consumers continue to prefer technology, Wheatley said, "Since COVID, we have seen consumer behaviour towards technology shift, as it increasingly becomes a necessity in the household."

Wheatley added:

In addition, the replacement cycle of technology is generally five to seven years, and with COVID being a key driver of tech upgrades, we see the next couple of years as key to device/appliance replacement.

JBH's sales metrics have evidenced its ability to execute on this opportunity, with strong sales trends persisting in CY25 to date.

The analyst is also bullish on the ASX 200 dividend stock due to its strong margin management.

Although the company could face foreign exchange headwinds, along with higher shipping costs and an increase in discounting, Wheatley said, "JB Hi-Fi has a strong track record of managing margins over the last decade, with gross margins being maintained in the 22% to 23% range over the last five-plus years."

Strong balance sheet should support future dividends

Wheatley also pointed out that JB Hi-Fi's strong balance sheet gives the company flexibility moving forward.

As at 31 December, the ASX 200 dividend stock had net cash of $551 million.

"JBH ended the 1H25 period net cash, and we expect this to continue into the full year, which could drive capital-management initiatives and deliver cash back to shareholders," Wheatley said.

"The strong balance-sheet position is also a positive in an uncertain macroeconomic environment," Wheatley added.

JB Hi-Fi increased its fully franked H1 FY 2025 interim dividend payout by 7.6% to $1.70 per share.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

3 top ASX dividend shares for income investors to buy

Let's see why these shares could be worth considering for an income portfolio.

Read more »

A woman is excited as she reads the latest rumour on her phone.
Dividend Investing

$1,000 buys 102 shares in this 6% yielding income stock

This is one of the most reliable dividend stocks on the ASX.

Read more »

Retired couple hugging and laughing.
Dividend Investing

How I'd invest $100,000 for retirement income on the ASX right now

This is a durable portfolio delivering retirement income today for Australian retirees.

Read more »

A woman has a thoughtful look on her face as she studies a fan of Australian 20 dollar bills she is holding on one hand while he rest her other hand on her chin in thought.
Dividend Investing

2 ASX dividend stocks that could pay you a passive income for years

Not all dividend-paying stocks are equal. Some offer a far more reliable payout than others.

Read more »

Smiling woman with her head and arm on a desk holding $100 notes, symbolising dividends.
Dividend Investing

Forget term deposits! I'd buy these ASX dividend shares instead!

These businesses have a lot to offer for income-focused investors.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

I'd buy 11,651 shares of this ASX stock to aim for $100 a month of passive income

This business can provide investors with an impressive level of dividends.

Read more »

ATM with Australian hundred dollar notes hanging out.
Dividend Investing

3 top ASX dividend shares for retirement income in 2026

These companies have strong market positions and offer yields of up to 11%.

Read more »

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Dividend Investing

The ASX dividend stocks I'd buy for a retirement portfolio

For income-focused investors, consistency matters. These three ASX shares could help deliver that over time.

Read more »