When it comes to ASX dividend shares, a winning combination can be dividends and growth together. It can be hard to find businesses that provide a good amount of capital growth and passive income, but at the current prices I think the two I'm going to cover can provide good returns.
If we see ASX dividend shares fall in value, it can boost the dividend yield. For example, if a business with a 5% dividend yield falls by 10%, the dividend yield would become 5.5%. Not only can we get a business at a better valuation, but the dividend income can be much more appealing.
So, let's get into it.
Accent Group Ltd (ASX: AX1)
This business sells a wide variety of shoe brands in Australia. Some of them it owns, like Glue Store and The Athlete's Foot, and others it acts as the distributor such as Vans, Ugg, Skechers, Kappa, Hoka and Dr Martens.
The Accent Group share price has dropped more than 27% since 19 April 2023, so it looks much better value. Short-term profitability (in FY24) may be challenged because of the economic conditions, but I believe the longer-term outlook looks promising because the business continues to grow its store count and add more brands to its portfolio.
Another helpful long-term factor is that Australia's growing population should be supportive for the ASX dividend share's long-term revenue – everyone needs shoes.
Commsec numbers suggest that the business could pay an annual dividend per share of 11.1 cents in FY24, which would be a grossed-up dividend yield of 8.3%. An earnings recovery is then projected for FY25, with earnings per share (EPS) growth of 28.7% to 14.8 cents and dividend growth of 15.3% to 12.8 cents per share. The FY25 grossed-up dividend yield could be 9.6%.
Propel Funeral Partners Ltd (ASX: PFP)
Propel is the second-largest funeral provider in Australia and New Zealand. The business is exposed to the morbid tailwind that funeral volumes are expected to keep growing over the coming years.
Despite the long-term potential, the Propel Funeral Partners share price is close to its 52-week low.
According to the Australian Bureau of Statistics (ABS), death volumes are expected to grow by 3.1% per annum from 2021 to 2032, and then 1.9% per annum from 2032 to 2050.
More funerals can lead to more revenue for Propel and stronger earnings, which can then fund bigger dividends. Don't forget that Propel can also grow profit by increasing funeral prices at least in line with inflation. On top of that, the business is steadily making acquisitions to increase its geographic reach.
In the first half of FY23, we saw the ASX dividend share's revenue rise 23.3% and operating net profit after tax (NPAT) grow by 34.9%. This helped grow the interim dividend by 18.3%. Commsec numbers suggest the business could pay an annual dividend per share of 15.2 cents in FY25, which would be a grossed-up dividend yield of 5.2%.
