Looking for an ASX growth stock offering a healthy passive income stream?
You may wish to run your slide rule over Adairs Ltd (ASX: ADH).
You’ve likely heard of Adairs. The company is one of Australia’s leading home furnishings specialist retail stocks. It has three store brands – Adairs, Mocka and Focus on Furniture.
The ASX growth stock has a strong record of value creation, with an experienced management team and a growing e-commerce footprint.
And Adairs has an admirable record of paying two, fully franked dividends per year.
So, how much stock do you need to buy for $1,5000 in annual dividends?
8,333 shares in this ASX growth stock for $1,500 in annual dividends
First, bear in mind we’re looking at trailing dividends here.
Future dividends from this ASX growth stock could be higher or lower.
With that said, Adairs reported some strong half-year results for the six months ending 31 December.
Highlights included record sales of $324 million, up 34% from the prior corresponding half-year. Statutory net profit after tax (NPAT) leapt 24% to $22 million, while net debts came down by 13% over the prior six months, to $81 million.
Looking ahead, management reaffirmed sales guidance of $625 million to $665 million for the full 2023 financial year.
Citing elevated supply chain costs, management reduced its earnings before income and taxes (EBIT) guidance by $5 million to the range of $70 million and $80 million.
The board also declared a fully franked, interim dividend of 8 cents per share, in line with the previous year.
Adding in the 10 cents per share final dividend (paid out on 23 September) and this ASX growth stock offers a fully franked trailing yield of 7.9% at the current share price of $2.27.
And to garner $1,500 in annual dividends, you’d need to buy 8,333 shares.
Adairs share price snapshot
When looking for ASX growth stocks to provide regular passive income, you ideally want to invest in companies that are also delivering capital gains.
As you can see in the chart below the Adairs share price has dropped 20% over the past year.
But the share price has stabilised in 2023. And Goldman Sachs, despite having a neutral rating on the stock, has a target price of $3.10. That’s almost 37% above the current share price.