The ASX dividend stock Lovisa Holdings Ltd (ASX: LOV) has dropped 39% from its all-time high in August 2025, as the chart below shows.
The jewellery business delivered sizeable growth during the first six months of FY26. Excluding the Jewells business, revenue rose 22.7% and net profit after tax (NPAT) jumped 21.5% to $58.4 million. It also hiked its interim dividend per share by 6% to 53 cents.
Its global Lovisa store network grew by 65 over the six months and 146 over the 12 months to the end of the HY26 period.
The Jewells business could become a possible second global brand, but this contributed a $10.8 million operating profit (EBIT) loss and $11.2 million NPAT loss. Despite that, the business was still able to deliver that 6% dividend growth and 2.6% net profit growth to $58.4 million.
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ASX dividend stock credentials
The business has delivered plenty of dividend growth over the past decade, and analysts are expecting ongoing dividend growth in the coming years. With a high dividend payout ratio and a lower valuation, the business is on track to provide a pleasing payout in FY26 and beyond.
Broker UBS projects that the business could pay an annual dividend per share of 79 cents in FY26, 93 cents per share in FY27 and $1.11 per share in FY28.
At the current Lovisa share price at the time of writing, those projections suggest a potential dividend yield (excluding franking credits) of 3% in FY26, 3.5% in FY27 and 4.2% in FY28.
Analysts suggest further dividend growth to $1.22 per share in FY29 and $1.33 per share in FY30.
Why I think Lovisa shares are a good buy
The fall in the Lovisa share price means that the business is now substantially cheaper than it was several months ago.
It continues to see solid revenue growth numbers. It reported comparable sales growth of 2.2% for the most recent half, reflecting the ongoing success of the existing store network.
While ANZ sales fell 4.9% to $109.5 million, its other two important regions did very well. European sales increased 39.4% to $191 million and Americas sales increased 37.6% to $140.6 million. I'm not expecting those regions to continue performing that strongly forever, but it bodes well for the foreseeable future.
Even if net profit only grows at the same pace as revenue, the business is growing at a very strong rate.
UBS projects the ASX dividend stock could make $88 million of net profit in FY26 and this could rise to $155 million by FY30.
As long as comparable store sales growth stays positive over time, I think the business could add hundreds of stores globally over the coming years.
If Lovisa is able to deliver operating leverage and grow profit margins, it could deliver a significantly stronger bottom line than some investors are expecting. I think the ASX dividend stock is on course for pleasing growth, including payout progress.
