The ASX dividend share Universal Store Holdings Ltd (ASX: UNI) has delivered one of the most pleasing result for dividend investors, in my view.
The ASX retail share sells what it calls premium youth fashion apparel across a number of businesses including Universal Store, Perfect Stranger, THRILLS and Worship. It has been on a strong run in the last year, as the above chart shows.
A number of retailers have been reporting solid trading updates for the end of FY25 and the start of FY26. But, Universal Store has been seeing strong sales for some time now and the company's update was no exception, allowing it to pay a large dividend to investors.
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Strong FY25 update
The 2025 financial year result showed sales growth of 15.5% to $333.3 million.
The Universal Store business experienced sales growth of 15% to $280.9 million and Perfect Stranger sales grew 83.1% to $25.5 million.
Pleasingly, the ASX dividend share saw some of its profit margins increase. The gross profit margin rose 100 basis points (1.00%) year over year to 61.1%. This helped underlying operating profit (EBIT) rise by 15.9% to $54.6 million.
The 15.2% growth of underlying net profit and the 23.3% increase of operating cash flow excluding interest and tax demonstrates how the business is becoming increasingly profitable, which are key drivers of the dividend.
Universal Store's board of directors decided to hike the annual dividend per share by 8.5% to 38.5 cents, including a final dividend per share of 16.5 cents. This means the business currently has a grossed-up dividend yield of close to 6%, including franking credits.
Strong outlook for further dividend growth
The business has started FY26 with a bang.
In the first seven weeks of FY26, total sales were up 17.2%, with Universal Store segment sales up 14.7% and Perfect Stranger sales up 52.8%.
The ASX dividend share intends to open another 11 to 17 new stores across the business during the new financial year, with four to six new Universal Stores, five to seven new Perfect Stranger stores and two to four new THRILLS stores. The company said it continues to be prudent in ensuring long-term profitability of new stores and lease renewals.
With total sales growing strongly, I think the underlying net profit can grow at least as quickly, even if there are no benefits from increased scale during the year. If the business maintains the same dividend payout ratio, then another good year could be on the cards for dividend investors.
It wouldn't surprise me if the grossed-up dividend yield for FY26 were to be above 6.5%, including franking credits, at the current Universal Store share price.
