The ASX dividend share Universal Store Holdings Ltd (ASX: UNI) already offers a solid dividend yield, and the payout could get even bigger in the coming years.
One of the benefits of the recent share market volatility has been an increase in prospective dividend yields. When share prices go down, it pushes up the dividend yield for new investors. For example, if the dividend yield was 4%, a 15% decline in the share price would make the yield 4.6%.
That's what has happened with Universal Store – its share price is down 15% since 20 February 2025, pushing up its dividend yield by 15%.
Let's cover what the business actually does and then consider the dividend yield.
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What this ASX dividend share does
We can think of this business as an apparel ASX retail share.
Universal Store says that it owns a portfolio of premium youth fashion brands and wholesale businesses. It has 109 physical stores across Australia, which aim to deliver a "carefully curated selection of on-trend apparel products to target a 16-35-year-old fashion-focused customer."
The main business is Universal Store, and it also owns Perfect Stranger and CTC (trading as the THRILLS and Worship brands).
How big could the dividend yield become?
The last two dividends declared by Universal Store come to a grossed-up dividend yield of 7.4%, including franking credits.
That came after the FY25 half-year interim dividend was hiked by 33.3% to 22 cents following a 16% rise in underlying net profit after tax (NPAT).
The HY25 result included several positives, including total sales growth of 16.1% to $183.5 million (with 92.3% growth of Perfect Stranger sales to $12.6 million), a 90 basis point rise in the gross profit margin to 60.6%, and a 14.9% increase in underlying operating profit (EBIT) to $35.4 million.
I think the company is capable of growing net profit at least as fast as sales. And the dividend could grow as fast as the net profit from here.
The ASX dividend share reported a trading update that showed direct-to-customer (DTC) sales in weeks 27 to 34 of FY25 increased 31.8% year over year, with Universal Store sales growth of 27.6% and Perfect Stranger sales growth of 90.1%.
With plans for further store growth and solid like-for-like sales growth, the second half of FY25 looks promising, with good momentum headed towards FY26.
It wouldn't surprise me if the FY26 grossed-up dividend yield, including franking credits, ends up being at least 8%.
