Could this be the best ASX dividend share to buy now?

Bell Potter sees potential for 60% upside and a 6%+ dividend yield.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

A group of businesspeople clapping.

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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Friend enjoying a meal at a restaurant, symbolising passive income.
Dividend Investing

I'd buy 4,068 shares of this ASX stock to aim for $200 a month of passive income

This business offers investors pleasing and resilient payouts.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

How much do I need in my superannuation to earn an annual $60,000 passive income?

Earning a consistent passive income off your superannuation is easier than you'd think.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Dividend Investing

Brokers name 2 ASX dividend shares to buy with 4% to 7% yields

Attractive dividend yields are forecast from these shares.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Dividend Investing

This ASX dividend stock could pay me $1,000 this year. Here's how many shares I'd need

The yield on this stock might surprise you.

Read more »

Two people lazing in deck chairs on a beautiful sandy beach throw their hands up in the air.
Dividend Investing

3 ASX dividend shares I'd buy for passive income right now

Which ASX dividend shares should I include in my portfolio?

Read more »

Person handing out $100 notes, symbolising ex-dividend date.
Best Shares

1 ASX dividend stock down 18% I'd buy today!

This ASX dividend stock crashed through 2022 to 2025. But it looks like it has turned a corner this year.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Dividend Investing

Is this beaten-down ASX software stock hiding a dividend winner?

A growing global business may be hiding behind the market’s pessimism.

Read more »

A disabled senior man in wheelchair playing with a pet dog at home.
Dividend Investing

How to invest $15,000 for passive income in retirement

These investments offer significant and reliable passive income.

Read more »