A number of ASX dividend shares have seen their share prices hit by volatility in 2022. But, an exciting part of the declines we're seeing is that potential dividend yields are getting pushed higher for prospective investors.
Businesses that are both undervalued and could pay a good dividend may be able to give investors an attractive total return, with a mix of both income and capital growth.
Keep in mind that just because an expert thinks a share price will rise doesn't mean the market will push it higher over the next 12 months. But I think it's interesting to look at businesses that are seen as significantly cheaper than their fair value.
With that in mind, let's look at some of the dividend opportunities that brokers think are attractive.
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Baby Bunting Group Ltd (ASX: BBN)
The Baby Bunting share price recently got walloped. It's down around 35% since 6 October 2022. While the baby product retailing business reported total sales growth of 12% to 7 October 2022, it said the first quarter gross profit margin was down 230 basis points year over year. At the same time, pro forma net profit after tax (NPAT) in the first quarter was down $3 million year over year.
After seeing the update, the brokers at Macquarie still rate the company as an outperform, with a price target of $4.95. That implies a possible rise of around 80% over the next year. It thinks the gross profit margin can somewhat recover during the year.
The ASX dividend share plans to open eight new stores in FY23, with six in Australia and the other two in New Zealand.
Macquarie puts the Baby Bunting share price valuation at 15 times FY23's estimated earnings with a projected grossed-up dividend yield of 6.1%.
Nine Entertainment Co Holdings Ltd (ASX: NEC)
Nine is the business behind a number of media names including the Nine free-to-air television network, digital streaming business Stan, and newspapers like the Australian Financial Review, The Age, and the Sydney Morning Herald.
Since the beginning of the year, the Nine share price has dropped around 33%. That's despite the business achieving a strong level of growth in FY22. The last financial year saw revenue growth of 15% to $2.69 billion and NPAT growth of 35% to $373.5 million.
The company also said the new financial year had "started on a positive note in terms of audiences" across all of its platforms. The advertising market, to August, had also "remained resilient", Nine said. It's also expecting its advertising revenue to grow more strongly than the markets where it operates in FY23.
The ASX dividend share is currently rated as a buy by the broker Credit Suisse, with a price target of $3.30. That implies a possible rise of more than 60%. The broker predicts the FY23 grossed-up dividend yield to be 10.1%.
PeopleIn Ltd (ASX: PPE)
The business provides staff, business services, and operational services, including workforce management, recruiting, onboarding, contracting, rostering, timesheet management, payroll, and workplace health and safety management.
The PeopleIn share price is another that has suffered heavily in 2022. It is down by 33% year to date.
Broker Morgans thinks that FY23 looks good for the company, rating it as add. It has a price target of $4.90, implying a possible rise of more than 60% over the next year. The potential grossed-up dividend yield for the 2023 financial year is 7.2%.
In FY22, the ASX dividend share generated $47.2 million of normalised earnings before interest, tax, depreciation, and amortisation (EBITDA). In FY23, it guided that it could generate normalised EBITDA of between $62 million to $66 million. However, management said at the time this was "based on the continuation of current economic conditions".
However, management also said the core business is "resilient even in the event of economic uncertainty". It plans to focus on growing in sectors that are defensive and have long-term demand for talent.
