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3 ASX dividend stocks have tremendous growth potential in my view

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There is a wide range of ASX dividend stocks, from blue chips to ASX growth stocks, that pay solid dividends.

I think there are some names that are small enough to have a big growth trajectory but are already profitable enough to pay decent dividends.

In my opinion, it’s the companies that are growing at a good pace that can generate the strongest returns over time thanks to compounding.

With that in mind, here are three of my leading ideas for ASX dividend stocks to grow at current prices.

Premier Investments Limited (ASX:PMV)

Premier Investments is one of the most compelling retail traders on the ASX in my opinion. It has many of the brands you would find in a Westfield Australian mall such as Just Jeans, Jay Jays and Peter Alexander.

But there are two parts of Premier Investments that particularly draw me in – Smiggle and Breville Group Ltd (ASX:BRG). Smiggle is a retailer that focuses on school children and sells a variety of branded products such as bags, pencil cases, etc. Products feature branded imagery from some of the most popular brands including Marvel and Minecraft.

Management is pleased with Smiggle’s performance since COVID reopened. It wants to grow in regions like Europe and Asia. The company aims to “maximize EBIT (earnings before interest and tax) growth.”

It owns 25.6% of Breville, a growing global kitchen appliance company. While this is not an article about Breville, I think this company is good at increasing its global addressable market and expanding into new countries.

Premier’s retail sales grew 42.8% year over year in the first 12 weeks of FY23.

The ASX dividend stock is expected to pay a projected dividend yield of 5.8% in FY23.

Universal Store Holdings Ltd (ASX:UNI)

Universal Store owns a “portfolio of premium youth fashion brands” that it sells through its retail stores, online and wholesale. It owns the businesses Universal Store and THRILLS while also exploring the Perfect Stranger brand as a standalone retail concept.

New stores continue to open. Universal Stores recently announced that it plans to open two new stores before Christmas, as well as another four to five stores in the second half of FY23.

In FY23 for the 21 weeks ended November 20, 2022, the Group’s total sales (excluding THRILLS) had increased by approximately 40% while at the same time reporting an improvement in gross profit margin.

The company believes the favorable trading conditions may continue after the lockdown.

Using Commsec’s estimates, Universal Store’s stock price is valued at 11 times estimated FY24 earnings, with a potential gross dividend yield of 8.4%.

Beacon Lighting Group Ltd (ASX:BLX)

Beacon Lighting might not seem like a company with a lot of growth potential, but I think it is, especially at this valuation point where Beacon Lighting’s stock price is down 30% year-to-date.

The shorter maturity can be somewhat volatile as housing construction in Australia may decline as interest rates rise.

Beacon Lighting ended fiscal 22 with 117 corporate stores and two franchise stores. Research by the company has identified the potential for 184 Beacon Lighting stores in Australia. This points to a possible increase of over 50%.

It strives to increase trading revenue. In FY22, Beacon’s commercial revenue increased 15.8%. The number of trading club members increased by 7,800 to 52,000 members. It acquires new commercial products to create a comprehensive range of products for its commercial customers.

The ASX dividend stock has launched a US-based Beacon Lighting business-to-consumer website to establish a US market presence. Beacon Lighting USA reported revenue growth of 51.9% in fiscal 2022, albeit from a relatively small base.

Beacon’s FY22 international revenue increased 27.9% to $15.7 million. The company has launched a new online sales channel for ceiling fans in China, Tmall Global. The company expects further expansion of Australian-designed products into the US, China, Asia and Europe.

According to Commsec, Beacon Lighting’s stock price is valued at 13 times estimated FY23 earnings, with a potential projected dividend yield of 5.9% for FY2023.

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