When it comes to dividends, one of my favourite options in the market right now is Accent Group Ltd (ASX: AX1).
It is the footwear and fashion retailer behind a collection of popular store brands.
Among its growing stable of brands are Glue Store, HypeDC, Platypus, Sneaker Lab, Stylerunner, and The Athlete's Foot.
And while the retail sector is not an easy place to operate given the cost of living crisis, Accent is a bit of an exception. This is due to its focus on younger consumers which have less exposure to rising mortgage payments and more exposure to increases in the minimum wage.
In fact, Goldman Sachs estimates that its target demographic will have an additional $1 billion in spending capacity in 2023, which bodes well for Accent's brands. It commented:
In aggregate, we believe this cohort has an additional ~A$1bn in spending capacity: the combination of minimum wage uplifts and limited inflationary pressures has resulted in an additional ~A$570-930 in annual spending capacity (per person) among the cohort of young adults who work and live at home.
But a positive outlook is nothing for income investors if the Accent dividend is on the slender side.
A growing ASX share with a big dividend yield
The good news is that the Accent dividend is expected to be on the larger side of town in FY 2023 and then grow from there.
For example, Goldman Sachs is forecasting a fully franked 12.2 cents per share dividend this year. Based on where this ASX share was trading at yesterday's close, this equates to an almost 6% yield.
This means that if you invested $10,000 into Accent's shares, you would generate approximately $600 in dividends over the next 12 months.
But it gets better! With Goldman Sachs forecasting sales growth of 12.5% per annum (and even stronger earnings growth) through to 2025, it is conceivable that Accent could pay a dividend of 16 cents per share in FY 2025. That would represent a yield of almost 8%, which would pay shareholders a further $800.
And if we assume average dividend growth of 5% per annum through to 2033 as the company expands its store network and grows its online business, Accent's dividend would be nearing 24 cents per share a decade from now. This represents an 11.6% yield if bought at yesterday's close price.
This means that if we were to add all those forecast dividends together, the total comes to almost $9,000. That would be a 90% return on your original investment in dividends alone and excludes any potential share price gains.
And while a lot can change in the space of 10 years and forecasts are not guarantees, I believe this is achievable and demonstrates why Accent could be a great ASX share to buy and hold for the next decade.
