If you are hunting for the winning combination of major upside and a generous dividend yield, then read on!
That's because Bell Potter has just identified one ASX 200 share that offers both.
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Which ASX 200 share?
The share that Bell Potter is recommending to clients is Premier Investments Ltd (ASX: PMV).
It is the owner of the Smiggle and Peter Alexander brands, as well as a sizeable stake in Breville Group Ltd (ASX: BRG).
Bell Potter notes that the company released its FY 2026 results this week, which were in line with expectations.
The broker was also pleased to see Premier Investments have an encouraging start to FY 2027. It said:
Premier Investment's FY26 result was in line with expectations, with Premier Retail EBIT (Pre-AASB 16 ex-Peter Alexander UK and other non-recurring items) of ~$176m pre-reported in Aug. The incremental update in the result was the early FY27 trading with global sales and gross profit $ (on a constant currency basis) for the first 7 weeks +1% on pcp. The Smiggle brand (~30% of Premier Retail) has commenced the key strategy reset in Aug with stores undergoing changes in the product range to reclaim the 6-12 year old customer demographic.
For the key PA brand (~70% of Premier Retail), store upsizing opportunities were reiterated in addition to the return of the new store growth in FY27. The company reported a strong cash position of $391m, in addition to a lean inventory position of ~$97m ahead of the 2Q peak season's trading.
Should you invest?
According to the note, Bell Potter has retained its buy rating on the ASX 200 share with a trimmed price target of $15.50 (from $16.50).
Based on its current share price of $11.95, this implies potential upside of 30% for investors over the next 12 months.
In addition, the broker is forecasting fully franked dividend yields of 7.1% in both FY 2027 and FY 2028. This boosts the total potential annual return to approximately 37%.
Commenting on the ASX 200 share, Bell Potter said:
Our target price is based on a sum-of-the-part valuation of the Premier Investments business with a 10x (prev. 11x) multiple for PA, 3x (prev. 4x) for Smiggle and a current market valuation for Breville Group (BRG). Our TP decreases ~6% to $15.50 (prev. $16.50) largely driven by the change in the market value of PMV's holding in BRG.
While we expect a period of slow growth for PMV near to medium term, we view PMV's forward multiple as attractive considering the Premier Retail division together with PMV's equity investments, land bank and cash position while retaining a strong balance sheet supportive of M&A. Our SOTP sees an attractive ~$1.6b EV for the key PA brand vs PMV's $1.9b market capitalization.
