I'm always on the lookout for attractive ASX dividend shares that can pay large dividend yields. Businesses with smaller market capitalisations can be very appealing because they may be able to deliver relatively stronger growth over time than businesses that are already large.
I believe the two stocks I'm going to talk about are capable of paying much larger dividends in future years.
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Bailador Technology Investments Ltd (ASX: BTI)
This business describes itself as a growth fund that invests in technology businesses. It targets unlisted companies at the expansion stage with global addressable markets.
Ideally, those target companies are run by the founders, have a proven business model with attractive unit economics, international revenue generation and the ability to generate repeat revenue.
Its portfolio can regularly change, but I'll tell you about what the ASX dividend share's four largest holdings do. Siteminder Ltd (ASX: SDR) is a world leader in hotel channel management and distribution solutions for online accommodation bookings.
Rezdy, which is now called RC TopCo after a merger, is an online channel manager and booking software platform for tours and activities.
Access Telehealth is a telehealth platform that "connects Australian communities to high-quality healthcare".
Rosterfy provides a volunteer management software platform that connects communities to events.
The ASX dividend share targets a dividend yield of 4% of its pre-tax net tangible assets (NTA). However, the Bailador share price is currently trading at a discount of around 27% compared to its February 2024 pre-tax NTA.
If Bailador's NTA stayed the same for the next 12 months, then the (fully franked) dividend yield would be 5.4% and the grossed-up dividend yield would be 7.8%. If the ASX dividend share's portfolio increases in value, then the dividend can increase.
Universal Store Holdings Ltd (ASX: UNI)
Universal Store is a retailer focused on selling premium fashion to younger Aussies. Its main store network is Universal Store and it operates the business CTC (trading under the THRILLS and Worship brands). The company is also rolling out Perfect Stranger as a standalone retail format. It has a total of more than 100 stores.
While like for like store sales have been challenged for the existing store network in the current environment, it has added enough new stores to keep growing its overall sales and profit. FY24 first half-year total sales rose 8.5% and statutory net profit after tax (NPAT) grew 16.7%.
The fact that it has been able to grow in this period is impressive. It has been able to grow its dividend every year since it started paying cash to shareholders in 2021. HY24 saw the interim dividend hiked by around 18% to 16.5 cents per share.
The ASX share reported that in the first seven weeks of the second half of FY24, Universal Store sales were up 4.5% (with like for like sales growth of 1%) and Perfect Stranger sales were up 56.5% (supported by like for like sales growth of 10.3%).
According to the estimates on CMC Markets, the company could pay an annual dividend per share of 24.8 cents in FY24 and 31.1 cents in FY26. That translates into a grossed-up dividend yield of 6.7% in FY24 and 8.4% in FY26.
