There are a number of ASX dividend shares that may be worthwhile options to consider for investment income.
Businesses in the retail sector often trade on lower price/earnings ratios (p/e ratios) which helps increase the dividend yield on offer.
Here are two of the ASX dividend shares that may be worth considering:
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Adairs Ltd (ASX: ADH)
Adairs is a leading retailer of homewares and furnishings.
Looking at the dividend estimate on Commsec, Adairs is projected to pay a grossed-up dividend yield of 8.4% in FY22.
FY21 saw a lot of growth by the business. Group sales increased 28.5%, whilst Adairs online sales went up 33.2%. Profitability also significantly increased. The Adairs underlying gross profit margin went up 520 basis points to 66.7% and group underlying earnings before interest and tax (EBIT) grew 97.3% to $109.1 million.
Adairs is looking to lower costs and fulfil customer demand more efficiently with its new completed DHL-operated national distribution. An annualised cost savings of around $3.5 million per year is expected from this change.
The ASX dividend share is also looking to grow sales. Management believe there is a relationship between store sales and retail floor space. Adairs says that each additional square metre typically adds around $4,000 in store sales. It's expecting to grow floor space by at least 8% in FY22 and at least 5% per annum in the following five years through new and upsized stores.
It's also aiming to accelerate its digital transformation and grow online sales through additional investment in customer acquisition, customer experience, its platform and team.
Accent Group Ltd (ASX: AX1)
Accent is one of the leading retailers of footwear in Australia with numerous brands including The Athlete's Foot, Stylerunner, Glue, PIVOT and The Trybe.
The company is planning a wide-ranging rollout of stores. For example, around 20 Stylerunner stores are expected to be trading by early 2022 and it's aiming to have at least 60 stores within the next three years. Online delivery to the USA, Singapore and Hong Kong was launched in July.
Glue has/had 22 stores at the last count. Four more stores are planned to open before Christmas and 60 stores are planned by December 2023.
Accent says that it continues to be defined by strong cash conversion and the consistent strong returns it delivers on shareholder funds. In FY21 it grew its total dividend per share by 21.6% year on year to 11.25 cents.
In FY22 the ASX dividend share is expected to pay a grossed-up dividend yield of 5.1% and in FY23 it's projected to pay a grossed-up dividend yield of around 7% according to Commsec.
Whilst lockdowns have been impacting store sales, digital sales continue to grow. In a trading update in the three weeks before its FY21 result release, Accent saw digital sales grow by 66.7%.
Management also said that the company "remains in a strong position with a flexible and resilient business model, a database of 8.4 million contactable customers, a strong balance sheet and conservative gearing levels."
It's continuing to invest in new stores, its digital capabilities and new business formats.
