If you are looking for ASX dividend shares to buy, then it could be worth considering the one in this article.
That's because Bell Potter believes it has the potential to offer both major upside and a very generous dividend yield.
Image source: Getty Images
Which ASX dividend share?
The dividend share that Bell Potter is recommending to clients is Regal Partners Ltd (ASX: RPL).
It is a growing boutique asset manager that manages a number of alternative investment strategies, investing across hedge funds, growth equity, credit and royalties, and real and natural assets.
Bell Potter is positive on the company's outlook and has lifted its earnings estimates to reflect its expectation for further funds under management growth. In fact, it believes the ASX dividend share could grow earnings in the teens over the medium term. It explains:
We upgrade EPS and retain our Buy rating. Regal Partners is an alternative investment manager, housing eight separate primary brands with a heritage in long/short equities. Strategies have track records that predate the global financial crisis. The Group controls $21bn in funds under management. We see further growth, driven by positive net inflows, investment performance, acquisitions and exposure to secular asset classes. This is supported by an aspirational blueprint to double offshore client capital.
Successful execution, in our view, provides a pathway to teens growth over the medium term, enhanced through operating leverage. A strong balance sheet further de-risks that view. Regal Partners has $250m in available capital. We see it well positioned to recycle capital, generating higher return, locking in gains and distributing this to shareholders.
Time to buy
According to the note, Bell Potter has reinstated its buy rating and $4.70 price target on the ASX dividend share.
Based on its current share price of $2.91, this implies potential upside of over 60% for investors over the next 12 months.
In addition, the broker is forecasting fully franked dividends of 18 cents per share in FY 2026, 19 cents per share in FY 2027, and then 22 cents per share in FY 2028. This equates to big dividend yields of 6.2%, 6.5%, and 7.6%, respectively.
Commenting on its investment thesis, Bell Potter said:
Our Buy is reinstated, and we hold our target price at $4.70/sh based on a DCF. We use global asset manager P/E multiples as a cross-check, with the cohort trading on an average 15x including 11x for long-equities, 15x for private markets/credit and 19x for comparable multi-boutiques and hedge funds. To that end, we see the valuation as undemanding.
Trading on 10x earnings, RPL does not screen as an alternative investment manager. We view the emerging evidence of performance fees, capital management and broadening investment strategies as an opportunity to narrow the discount and drive a re-rating in the stock.
