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A number of ASX dividend stocks have seen their share prices hit by volatility in 2022. But, an interesting part of the declines we’re seeing is that potential dividend yields are being pushed higher for potential investors. .
Companies that are both undervalued and likely to pay a good dividend can offer investors an attractive total return, with a combination of income and capital growth.
Keep in mind that just because an expert thinks a stock’s price will go up doesn’t mean the market will push it up over the next 12 months. But I think it’s interesting to look at companies that are considered significantly cheaper than fair value.
With that in mind, let’s take a look at some of the dividend opportunities that brokers find attractive.
Baby Bunting Group Ltd (ASX:BBN)
Baby Bunting’s stock price recently crashed. It’s down about 35% since Oct. 6, 2022. While baby products retail reported total sales growth of 12% as of Oct. 7, 2022, it said first-quarter gross profit margin was down 230 basis points year-over-year. At the same time, pro forma net income after tax (NPAT) in the first quarter decreased by $3 million year-over-year.
After seeing the update, Macquarie brokers still rate the company as an outperformer, with a price target of $4.95. This implies a possible rise of around 80% over the next year. He thinks the gross profit margin may recover somewhat over the course of the year.
ASX Dividend Share plans to open eight new stores in FY23, including six in Australia and the other two in New Zealand.
Macquarie values Baby Bunting’s share price at 15 times estimated FY23 earnings with an expected premium dividend yield of 6.1%.
Nine Entertainment Co Holdings Ltd (ASX:NEC)
Nine is the company behind a number of media names, including free-to-air television network Nine, digital streaming company Stan, and newspapers like the Australian Financial Review, age, and the Sydney Morning Herald.
Year-to-date, Nine’s stock price has fallen approximately 33%. This is despite the company achieving a strong level of growth in FY22. The last fiscal year saw revenue growth of 15% to $2.69 billion and NPAT growth of 35%. % at $373.5 million.
The company also said the new fiscal year had “started on a high note in terms of viewership” across all of its platforms. The ad market, through August, had also “remained resilient,” Nine said. It also expects its advertising revenue to grow faster than the markets it operates in during FY23.
The ASX Dividend stock is currently considered a buy by broker Credit Suisse, with a price target of $3.30. This implies a possible increase of more than 60%. The broker expects the premium dividend yield for FY23 to be 10.1%.
The company provides personnel, business and operational services, including workforce management, recruiting, onboarding, contracting, timesheet management, payroll and occupational health and safety management.
The PeopleIn stock price is another one that has suffered a lot in 2022. It is down 33% since the start of the year.
Broker Morgans thinks FY23 looks good for the business, calling it an add. It has a price target of $4.90, implying a possible upside of more than 60% over the next year. The potential yield of the enhanced dividend for the 2023 financial year is 7.2%.
In FY22, the ASX Dividend Share generated $47.2 million in normalized earnings before interest, taxes, depreciation and amortization (EBITDA). In FY23, it said it could generate normalized EBITDA between $62 million and $66 million. However, management said at the time that this was “based on the continuation of current economic conditions”.
However, management also said the core business was “resilient even in the face of economic uncertainty”. He plans to focus on growth in areas that are defensive and have long-term talent demand.