A Preferred ASX Dividend Giant Over BHP Stock for Consideration

In the vast landscape of ASX blue chips, the choice between investing in a mining giant like BHP Group Ltd (ASX: BHP) and a retail powerhouse like Premier Investments Limited (ASX: PMV) can be a daunting task, especially when considering dividend potential. Let's delve into the ASX dividend stocks growth, market dynamics, and expansion strategies of these two giants to unearth the better investment choice.

1. The Dividend Landscape

The dividends from the mining business have witnessed remarkable growth, making BHP a significant player. However, Premier Investments emerges as a compelling alternative, with its own set of strengths that position it favorably in the dividend debate.

2. Premier Investments: A Retail Powerhouse

Premier Investments stands as the force behind several renowned retail brands, including Just Jeans, Peter Alexander, and Smiggle, to name a few. Its diversified portfolio, including holdings in Breville Group Ltd (ASX: BRG) and Myer Holdings Ltd (ASX: MYR), adds a layer of strategic investment.

3. The Case for Premier Investments Shares

In uncertain economic times, ASX retail shares often present unique opportunities. Premier Investments, despite a 20% dip in its share price from the peak in November 2021, continues to showcase impressive profitability. In FY23, its underlying net profit soared by 6.4% to $278.6 million, coupled with a remarkable 14% increase in the annual ordinary dividend to $1.14 per share.

4. Expanding Horizons: Premier's Growth Trajectory

Premier Investments remains committed to expansion, opening new stores and diversifying its geographic reach. Noteworthy expansions include Peter Alexander's six new stores in FY23 and plans for additional openings or upsizing in select locations. The company's specialty brand, Smiggle, is also eyeing international growth, with store expansions in the UAE, Qatar, Kuwait, Oman, and Bahrain.

5. Dividend Growth: A Decade of Success

Over the past decade, Premier Investments has demonstrated an impressive track record of dividend growth. The annual ordinary dividend has surged from 38 cents per share to $1.14 per share, marking a staggering 200% increase. Projections on Commsec estimate a potential dividend per share of $1.23 in FY25, translating to a grossed-up dividend yield of 7%.

6. BHP Stock: A Cautionary Approach

While BHP is renowned for its substantial dividend yield, caution is advised. The volatility in commodity prices, particularly iron ore, can impact BHP's dividend stability. The recent surge in iron ore prices above US$130 per tonne has boosted BHP's profitability and share price. However, prudent investors may consider waiting for a more opportune moment, perhaps during a period of market pessimism, to delve into ASX dividend giants like BHP, Rio Tinto Ltd (ASX: RIO), and Fortescue Metals Group Ltd (ASX: FMG).

Conclusion

The choice between ASX BHP and Premier Investments hinges on various factors, from the stability of commodity prices to the resilience of the retail sector. Investors must carefully weigh the dividend growth, market trends, and expansion strategies of these giants before making an informed investment decision.