Premier Investments and Super Retail are two ASX dividend shares to consider.
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There are some quality ASX dividend shares that might be worth thinking about for the long-term.
Despite all of the impacts of COVID-19 over the last year and a half, there are some businesses that have managed to compensate with large digital sales growth.
Businesses that are making good profit have the chance of also paying attractive dividends.
Here are two to consider:
Premier Investments Limited (ASX: PMV)
This is a business that owns several fashion and retail brands such as Peter Alexander, Just Jeans, Jay Jays and Smiggle. It also has sizeable investments in Breville Group Ltd (ASX: BRG) and Myer Holdings Ltd (ASX: MYR).
Premier Investments continues to see global disruption to its retail network with ongoing store closures in Australia. However, it’s expecting underlying earnings before interest and tax (EBIT) in FY21 to be between 82% to 92% higher than FY20. That translates to guidance of between $340 million to $360 million.
The company attributed this performance to several factors. It invested in stock for the winter and it has managed to fulfil “strong” customer demand for winter product ranges across all brands.
It has seen an “exceptional” expansion of the gross profit margin. At the time of a trading update, the ASX dividend share said its gross margin had increased by over 380 basis points in the second half.
Premier Investments was seeing “strong” online sales growth and a highly profitable online performance a couple of months ago.
Finally, profit is being helped by a “strong cost culture” including agreements with landlords that rebase its rent expense.
According to Commsec, the Premier Investments share price is valued at 21x FY22’s estimated earnings with a FY22 forecast grossed-up dividend yield of 4.5%.
Super Retail Group Ltd (ASX: SUL)
Super Retail is another ASX share in the retail space. It operates under the brands of Supercheap Auto, Rebel, BCF and Macpac.
The business is seeing an enormous amount of online sales growth. In FY19 it saw total online sales of $201 million. FY20 saw total online sales of $291 million, including $164 million in the second half (which was COVID-affected). The first half of FY21 saw online sales of $237 million, up 86.6% on the prior corresponding period.
Super Retail says that its profit contribution dollars per transaction was significantly higher for online sales than for in-store sales.
In the latest trading update, for the first 44 weeks of FY21, the ASX dividend share had seen total like for like sales growth of 28%. BCF produced 59% sales growth, whilst the other three brands saw growth of around 20%.
This may also come with elevated profit margins. Due to continued strong demand from consumers, Super Retail has maintained relatively subdued levels of promotional activity in the second half. The gross profit margin improvement seen in the first half has been maintained in the second half.
However, the company said that second half operating expenses will reflect a catch-up on projects deferred during COVID-19 and increased reinvestment in the business.
Using projections on Commsec, the Super Retail share price is valued at 15x FY22’s estimated earnings with a forward grossed-up dividend yield of 6.4%.
Should you invest $1,000 in Premier Investments right now?
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Motley Fool contributor Tristan Harrison 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 owns shares of and has recommended Premier Investments Limited and Super Retail Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.