Although the outlook for interest rates is improving by the week, it looks likely to still be some time before rates are at a level that makes savings accounts or term deposits better options than dividend shares.
For example, according to the most recent weekly economic report from Westpac Banking Corp (ASX: WBC), its economists expect the cash rate to be 1.5% at the end of 2023. That’s much better than 0.1% currently, but still a long way from traditional levels of 4% to 5%.
In light of this, the following dividend share could be a good option for income investors for the time being. Here’s what you need to know about Accent Group Ltd (ASX: AX1).
This footwear retailer could be a good option for income investors right now. Especially with the Accent share price down by almost 50% from its 52-week high.
This share price weakness has been driven by a decidedly poor half year result from Accent last month. Though, it is worth noting that this was outside the company’s control and caused entirely by COVID headwinds. Accent revealed that at times through the months of July to October, more than 55% or 400 of its 700 stores were required to close due to government mandated lockdowns.
The good news is that with COVID restrictions easing and life returning back to normal, Accent looks well-placed to bounce back strongly in FY 2023. It is for this reason that Bell Potter thinks investors should take advantage of its pullback.
It commented: “Notwithstanding COVID impacts on recent trading, we believe AX1’s core business remains strong with all growth levers intact. Valuation also remains undemanding.”
Bell Potter currently has a buy rating and $2.75 price target on the company’s shares. Based on the current Accent share price, this implies potential upside of 69% for investors over the next 12 months.
As for dividends, the broker has pencilled in a fully franked dividend of 5.8 cents per share in FY 2022 and then 10.9 cents per share in FY 2023. Based on the current Accent share price of $1.63, this will mean yields of 3.55% and 6.7% respectively.
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