There are plenty of ASX dividend shares to choose from on the Australian share market.
So many, it can be hard to decide which ones to buy over others.
Well, to narrow down your options, let's take a look at one that Morgans thinks could offer both major upside and an above-average fully franked dividend yield.
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Which ASX dividend share?
The dividend share that Morgans is positive on is Universal Store Holdings Ltd (ASX: UNI).
It is the owner of a portfolio of premium youth fashion brands and omnichannel retail and wholesale businesses. This includes the Universal Store, Perfect Stranger, THRILLS, and Worship brands.
At the last count, the company operated 128 physical stores across Australia in addition to online channels.
It notes that its strategy is to grow and develop its premium youth fashion apparel brands and retail formats to deliver a carefully curated selection of on-trend apparel products to target 16-35 year-old fashion focused customers.
Earlier this week, it released a trading update for the first 17 weeks of FY 2027. That update revealed that direct to customer sales were up 9.3% on the prior corresponding period.
It also revealed that its gross margin is benefiting from the expansion of the Perfect Stranger retail format and a stronger comparative exchange rate, which is offsetting higher transport costs.
Bullish broker
According to a note out of Morgans, it felt Universal Store delivered a robust update given the challenging environment. It commented:
In the context of a challenging consumer environment, UNI has delivered a robust trading update at its AGM for the first 17 weeks of FY27. Total direct to consumer sales are up 9.3%. LFL sales in the core Universal Store banner remained broadly consistent with the first 7 weeks, against a strong comp in the pcp. Perfect Stranger has delivered double digit LFL sales growth and CTC/ THRILLS remains volatile.
Gross margins continue to benefit from PS mix and favourable FX is offsetting higher transport costs. We also anticipate ongoing cost investment, but we expect cost growth to moderate. UNI has a strong pipeline of new store openings (16-20 in FY27), which will support total sales growth.
In response, the broker has retained its buy rating with a $10.20 price target. Based on its current share price, this implies potential upside of approximately 40% for investors over the next 12 months. It adds:
We have made minor revisions to forecasts (<1%) and no changes to our valuation. BUY maintained with a $10.20 price target.
As for income, the broker is expecting this ASX dividend share to pay out 45 cents per share in FY 2027 and then 51 cents per share in FY 2028. This represents generous dividend yields of 6.15% and 7%, respectively.
