It is not often that high-quality ASX dividend shares go on sale.
But that is exactly what appears to have happened with Lovisa Holdings Ltd (ASX: LOV).
The fashion jewellery retailer's shares are down 45% from the 52-week high of $43.68 reached in August last year.
And at $23.93, they are now trading not far from their 52-week low of $20.23.
Let's see why this could be a buying opportunity for income investors.
Image source: Getty Images
What's happening?
This is not a business in decline. In its half-year results, Lovisa delivered total revenue growth of 23.3% to $500.7 million and comparable store sales growth of 2.2%. Underlying net profit after tax rose 21.5% to $69.6 million.
Comparable sales growth has slowed compared to boom periods, but a positive 2.2% comp in a tough consumer environment is hardly alarming. It shows resilience, not weakness.
The real engine of Lovisa is store growth. The ASX dividend share opened 85 new stores during the half, taking its global footprint to 1,095 stores across more than 50 markets.
Europe continues to accelerate, the Americas are scaling, and management has the balance sheet to keep investing. Cash flow from operations rose 30.3% to $183.8 million, providing plenty of fuel for further rollout and earnings and dividend growth.
Should you invest?
The team at Morgans remains bullish on this ASX dividend share. It currently has a buy rating and $36.80 price target on its shares. This implies potential upside of over 50% for investors over the next 12 months. It said:
LOV reported a strong underlying 1H26 result with EBIT up 20.4%, ~6% ahead of our expectations, driven by store network growth and strong gross margins. During the period, the pace of store rollout continued with a net of 64 new stores in the period, bringing the total count to 1,095. We have increased our EBIT by 3%/1% respectively in FY26/27, driven by higher sales and gross margin offset by higher costs and D&A. We see the pull back in share price as a buying opportunity at ~23x FY27 PE. Our valuation lowers to $36.80 (from $40) and we retain our BUY recommendation.
As for income, the broker is forecasting partially franked dividends of 87 cents per share in FY 2026 and then 117 cents per share in FY 2027. This equates to dividend yields of 3.6% and 4.9%, respectively.
