2 ASX 200 shares that could be top buys for dividends

Premier Investments is one leading ASX 200 dividend share.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These S&P/ASX 200 Index (ASX: XJO) shares offer attractive dividend yields for investors.

Businesses that have a relatively high dividend payout ratios and attractive valuations can have good yields on offer.

There are plenty of ASX 200 shares that pay dividends such as Westpac Banking Corp (ASX: WBC), Rio Tinto Limited (ASX: RIO) and Santos Ltd (ASX: STO).

However, these two income stocks could be particularly interesting for dividend investors:

man placing business card in pocket that says dividends signifying asx dividend shares

Image source: Getty Images

Premier Investments Limited (ASX: PMV)

Premier Investments is one of the leading ASX 200 shares involved in the retail industry. It has a number of apparel brands within its portfolio such as Just Jeans, Peter Alexander, Jay Jays, Dotti and Portmans. It also owns Smiggle, as well as sizeable investments in Breville Group Ltd (ASX: BRG) and Myer Holdings Ltd (ASX: MYR).

In FY21, Premier Investments' board declared a final fully franked dividend of $0.46 per share (up 27.8%), taking the full year fully franked dividend to $0.80 per share (up 14.3%).

The trailing full year dividend of $0.80 per share, translates to a grossed-up dividend yield of 4.2%.

The ASX 200 dividend share experienced a large rise in profitability during FY21, which included strong online growth. FY21 retail global sales rose 18.7% to $1.4 billion with Peter Alexander sales rising 34.7% to $388.2 million. Overall online sales jumped 36.4% to $300.7 million. FY21 net profit rose 97.3% to $271.8 million.

Despite widespread lockdowns for many of its stores in the first 17 weeks of FY22, Premier Investments' sales were only down by 3.5% and had improved nicely from the update given in September 2021 when its FY22 was only a few weeks old.

According to Commsec, the Premier Investments share price is valued at 20x FY22's estimated earnings with a projected grossed-up dividend yield of 4.7%.

Dicker Data Ltd (ASX: DDR)

Dicker Data claims to be Australia's leading distributor of IT hardware, software, cloud and internet of things solutions for reseller partners. It helps business clients transition customers through technological change.

The IT business is benefiting in a number of areas, with strong growth since the onset of COVID as more businesses need cloud infrastructure and home office capabilities.

On top of that, the continuing global chip shortage and consequent supply constraints have contributed to an overall improvement in "margin quality". This is expected to continue for the foreseeable future.

Dicker Data is experiencing strong demand with a backlog of orders to fulfil and as supply improves, it's expecting to meet this demand in the final quarter of 2021.

The ASX 200 dividend share notes that the role of technology in business success continues to proliferate and the evolving hybrid and modern workforce becomes increasingly dependent on more intelligent, faster and collaborate tech solutions.

Cybersecurity is another area that Dicker Data can generate growing earnings from.

In the company's latest update for the nine months to September 2021, it reported that total revenue was up 16.1% to $1.72 billion and profit before tax had increased by 26% to $76.6 million.

The last 12 months of dividends amounts to a grossed-up dividend yield of 4%. According to Commsec, the Dicker Data share price is valued at 27x FY23's estimated earnings.

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. owns and has recommended Dicker Data Limited. The Motley Fool Australia owns and has recommended Dicker Data Limited. The Motley Fool Australia has recommended Premier Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Dividend Investing

A wad of $100 bills of Australian currency lies stashed in a bird's nest.
Dividend Investing

How many NAB shares do I need to buy for $10,000 a year in passive income?

NAB shares historically pay two fully-franked dividends every year.

Read more »

A cool young man walking in a laneway holding a takeaway coffee in one hand and his phone in the other reacts with surprise as he reads the latest news on his mobile phone
Dividend Investing

8% yield: The ASX is getting a new dividend stock that pays out monthly

This soon-to-be stock has averaged an 8% yield since 2016...

Read more »

Happy young couple saving money in piggy bank.
Dividend Investing

How many BHP shares do I need to $1,000 of passive income?

Let's run the numbers and find out what is needed.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

Where to invest $2,000 in ASX dividend shares

Morgans thinks these shares are buys with attractive forecast dividend yields.

Read more »

a woman puts a pen to her mouth as she smiles slightly while checking an old book style diary/calendar.
Dividend Investing

20 ASX shares with ex-dividend dates next week

To be eligible to receive a dividend, you must own the ASX share before the ex-dividend date.

Read more »

View of a business man's hand passing a $100 note to another with a bank in the background.
Dividend Investing

Everything you need to know about the latest Soul Patts dividend

Here’s how big the latest dividend is from the investment house…

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Dividend Investing

Fund manager names 3 top ASX 200 dividend stocks to buy today

A leading fund manager expects these quality ASX dividend stocks will boost their payouts.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

Why ASX dividend shares could still be better than term deposits

Let's see what dividend shares offer compared to term deposits.

Read more »