ASX dividend stock Nick Scali Ltd (ASX: NCK) has fallen 37% from its peak less than six months ago.
I love buying dividend-paying shares when their valuations decline because we can get a lower price and a higher dividend yield.
For example, if a business has a dividend yield of 5% and then the share price falls 10%, the dividend yield becomes 5.5%. That's a noticeably better passive income return, just because we bought during a dip.
The Nick Scali share price is down 37% – investors can get a much better dividend yield now.
I think the ASX dividend stock is a great buy today for a few different reasons.
Image source: Getty Images
Opportunistic time to buy
It's understandable that retail shares go through volatility because of how economic conditions can change, affecting consumer spending and investor confidence.
Higher interest rates may well mean that demand for mid-range furniture declines during this period, but I don't think conditions will remain negative forever, which is why this could be a good time to invest opportunistically.
It's not often that the business falls by more than a third, but those large declines have proven to be good times to buy for the longer-term as the business grows.
The company's existing store network can see like-for-like sales grow in reasonable conditions, but the store network expansion is helping increase its underlying value as time goes by, even as the share price moves up and down.
Store expansion
As of December 2025, the business had 64 Nick Scali stores across Australia and New Zealand and 46 Plush stores in Australia.
The company says there's a long-term opportunity to reach 86 Nick Scali stores in Australia and New Zealand, as well as between 90 to 100 Plush stores across Australia and New Zealand. In other words, its overall ANZ network could grow from 110 to up to between 180 to 200 stores.
On top of that, the company recently expanded into the UK after acquiring Fabb Furniture. It's now rebranding those stores to Nick Scali. The UK has a much bigger population than Australia, so there's plenty of room for growth there too.
For now, the ASX dividend stock has around 20 stores in the UK and the business has a long-term opportunity of between 60 to 70 UK stores. With how the business is selling Nick Scali furniture to UK stores, the UK segment's gross profit margin is rapidly rising.
The UK business saw total January written sales of $6.7 million, with four refurbished stores achieving LFL store written sales growth of 32% compared to the prior corresponding period.
Better dividend yield
According to Commsec, for FY26, the business is projected to pay an annual dividend per share of 68.7 cents – that translates into a grossed-up dividend yield of 6.1%, including franking credits.
The dividend is forecast to grow even further by FY28, with a possible annual payout of 76.9 cents per share. That translates into a grossed-up dividend yield of 6.8%, including franking credits.
Overall, the future looks positive for dividend investors.
Cheaper valuation
It's clear that the ASX dividend stock is cheaper – it has dropped by more than a third. But what earnings multiple is it now trading at?
According to the forecast on Commsec, the Nick Scali share price is valued at 19x FY26's estimated earnings and 16x FY27's estimated earnings.
I think this is a great time to invest in the ASX dividend stock, though it's not the only ASX share that looks good value today.
