The ASX dividend stock Beacon Lighting Group Ltd (ASX: BLX) has fallen by 56%. When a cyclical business falls that far, I think it could be a great buying opportunity.
This business is a leading lighting retailer in Australia, with a major retail store network, as well as having commercial customers, international sales and a property portfolio.
Let's look at how rewarding the ASX dividend stock could be for cash dividend payments.
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Dividend projections for the next few years
The company is certainly facing an interesting outlook considering the higher interest rates and elevated inflation. It has certainly fallen a lot – more than 50%. It could be a good idea to invest when the market is fearful about the situation.
The projection on Commsec suggests the business could pay an annual dividend per share of 7 cents in FY26. That translates into a potential grossed-up dividend yield of 6.1%, including franking credits. This would represent a year-over-year decline in the payout. I think that's a great starting point for the yield to grow from there.
After FY26, the forecast on CMC Invest suggests the business could hike its payout in the two subsequent years.
The projection on CMC Invest suggests the business could pay an annual dividend per share of 8.1 cents per share in FY27, which would translate into a grossed-up dividend yield of 7%, including franking credits.
After that, the estimate on CMC Invest suggests the business could deliver an annual dividend per share of 9 cents per share in FY28. That would translate into a grossed-up dividend yield of 7.8%, including franking credits.
Compelling foundations for the ASX dividend stock's growth
I believe the business has several strengths that can help it in the future.
For starters, the company is still rolling out new locations in its local market, which gives it the opportunity to grow sales and improve its scale benefits, which could help increase its gross profit margin.
The company could continue to increase its number of e-commerce and trade customer sales, which gives the company more growth avenues.
Finally, the company is increasing its presence internationally, which is a large addressable market if the company can get that right. In the FY26 half-year result, its international sales increased by 13.5%, with sales increasing in all regions.
According to the forecast on CMC Invest, the Beacon Lighting share price is valued at 13x FY26's estimated earnings.
