One oversold ASX 300 dividend share (with a 6% yield) to buy now

Here's why this ASX 300 dividend payer could be worth a look…

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To say that the Adairs Ltd (ASX: ADH) share price has been heavily sold off of late is a bit of an understatement.

Adairs shares have had a fairly depressing 18 months or so. Back in mid-2021, stocks in the company were flying, having just hit a new record high of almost $5 a share. Yesterday, the ASX 300 retailer closed at $2.80 a share. That's a plunge of more than 40% from those highs we saw just a year and a half ago:

Created with Highcharts 11.4.3Adairs PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

But have Adairs shares been oversold? That's a very different question. Clearly, the market thought that they were oversold, given the recovery Adairs has embarked upon of late.

Back in June last year, Adairs shares hit a new 52-week low of $1.65 each. At the share price of $2.80 that the company closed at yesterday, Adairs is almost 70% above that low.

But are Adairs shares still oversold and thus have further room to climb?

Is ASX 300 retailer Adairs still undersold today?

Well, one ASX broker thinks so. As my Fool colleague James covered yesterday, Adairs has been rated as a buy by ASX broker Jarden. Jarden has given the homewares retailer a 12-month share price target of $3.28. That would give investors a further upside of 17% from today's pricing if realised.

Jarden liked what it saw in Adairs' annual general meeting last year, in which the company announced that its sales over the first four months of FY2023 were up by 7.6% compared to the same period in FY2022.

The broker is also expecting Adairs to jack its dividends back up over the next two financial years. Adairs forked out 18 cents per share in FY2022 (down from 24 cents in FY2021), which Jarden expects to be repeated in FY2023.

However, by FY2024, the broker reckons Adairs will be in a position to fork out 22 cents per share.

Today, Adairs has a trailing, fully franked dividend yield of 6.43%. But if the company does pay out 22 cents per share in FY2024, it would have a forward yield of 7.86% at the current share price. That could well make this ASX 300 dividend share worth buying at today's pricing.

Motley Fool contributor Sebastian Bowen has positions in Adairs. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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