The All Ordinaries (ASX: XAO), or All Ords, ASX share Universal Store Holdings Ltd (ASX: UNI) could pay a very large dividend yield in FY25.
I think the retailer has already proven that it's a leading ASX dividend share. Looking at its latest two dividends, the business has a grossed-up dividend yield of 7.1%. This has been boosted thanks to the Universal Store share price falling by 20% since 30 January 2023.
Universal Store describes itself as the owner of a portfolio of "premium youth fashion brands and omni-channel retail and wholesale businesses". Its core businesses are Universal Store and CTC, which trades as the THRILLS brand. It is currently trialling the Perfect Stranger brand as a standalone retail concept. It operates more than 93 physical stores.
Those businesses sell "on-trend apparel products" to fashion-focused customers aged between 16 to 35.
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Strong recent performance
During the FY23 first half, the ASX All Ords share opened four new Perfect Stranger stores, bringing the total number of stores to seven. Despite Perfect Stranger being the largest-selling brand within Universal Store, the performance of those seven stores has had "little to no impact on nearby Universal Store locations".
Perfect Stranger's positive early results from its move into New South Wales have bolstered confidence in a potential "nationwide rollout". I think this is very promising and suggests there could be years of growth ahead for this brand.
The acquired THRILLS business has also been sustaining its sales growth.
Overall, excluding Cheap Thrills, group total sales increased 28.6% in HY23. Including Cheap Thrills, sales grew 34.5% to $145.7 million.
Underlying earnings before interest and tax (EBIT) went up 43.2% to $28.5 million, while statutory net profit after tax (NPAT) increased by 31.7% to $17.8 million. In summary, the business is profitable and rapidly growing.
This profit growth is funding the attractive, growing dividend. The HY23 dividend went up by 27% to 14 cents per share.
In the second half of FY23, it's expecting to open four to six new Universal Store locations, along with three to four new Perfect Stranger stores and one new THRILLS stores. It's aiming to have more than 100 stores by 30 June 2023.
The company is also aiming to control costs, as well as improve productivity and efficiencies amid the current environment of rising costs.
Dividend yield expectations for the All Ords ASX share
The ASX All Ords share's earnings per share (EPS) is expected to grow each year to FY25, according to Commsec, helped by its growth plans and increasing scale. The dividend is expected to rise each year as well, to 35 cents per share in FY25.
This dividend would translate to a grossed-up dividend yield of 10.2% for the 2025 financial year.
I think Universal Store is a very intriguing investment and could deliver compelling market-beating total returns for investors over the next few years, though there could be volatility.
