The ASX dividend share Chorus Ltd (ASX: CNU) may not be one of the most well-known stocks, but it's a multi-billion-dollar business that is well-liked by a fund manager.
When good businesses get overlooked, it can mean picking up a bargain at a price that's too good to ignore.
Of course, just because a company has been identified as good value doesn't guarantee it will deliver big returns. However, L1 Capital is convinced that the New Zealand business Chorus is an opportunity.
Why is this ASX dividend share appealing?
The company says it builds and manages an open-access internet network, rolling out ultra-fast broadband that will benefit generations to come. It also works with phone and broadband providers to keep New Zealanders connected.
L1 Capital is attracted to the business because it owns high-speed fibre broadband infrastructure in New Zealand and is one of very few regulated digital infrastructure assets remaining in public ownership.
The fund manager also noted that the ASX dividend share is shifting from being a network builder to a network operator, which is an "inflection point for cash generation and shareholder remuneration".
In relation to shareholder returns, L1 Capital is expecting the business to continue paying larger dividends.
Payout potential
Dividends are a great way for shareholders to benefit from the business' profit generation and receive 'real' returns paid to their bank account while they hold for the long term.
The ASX dividend share has grown its dividend payout each year since FY21, when it paid an annual dividend per share of NZ 25 cents. That grew to NZ 35 cents per share in FY22, then NZ 42.5 cents per share in FY23, and then NZ 47.5 cents per share in FY24.
Pleasingly, the fund manager notes the New Zealand business has guided that it will grow its dividend per share by 21% to NZ 57.5 cents in FY25. This could translate into a dividend yield of 6.8%.
There could be another dividend increase for shareholders in FY26. L1 Capital is forecasting that the 2026 financial year payout could be NZ 60 cents per share. That would translate into a dividend yield of around 7%, according to L1.
Overall, there appears to be a good future for income-focused investors.
