ASX retail shares typically trade on a lower valuation compared...

ASX retail shares typically trade on a lower valuation compared to other sectors like technology so they can be good options for dividend income. But bear in mind that a recession can lead to a dividend reduction. This is why I'm focusing on the dividends for 2025, not 2024.

Step One Clothing Ltd (ASX: STP)

Step One describes itself as a direct-to-consumer online retailer of 'innerwear' (underwear). It has an end-to-end FSC-certified supply chain. The products are "high-quality, organically grown, certified, sustainable and ethically manufactured", according to the company.

With a presence in the United Kingdom and the United States, it has international growth potential. I think this sort of product can see growing demand in a world where more people want sustainable and ethically sourced products.

In the first half of FY24, Step One expects revenue to grow 22%–25% to between $44 million and $45 million. Earnings before interest tax, depreciation and amortisation (EBITDA) may grow by at least 33% to between $10 million and $11 million. In percentage terms, the US has seen the most growth.

According to Commsec, the Step One share price is valued at 16x FY25's estimated earnings with a possible grossed-up dividend yield of 8.9%.

https://www.**promotion blocked**.au/2024/01/15/2-asx-dividend-stocks-expected-to-pay-huge-yields-in-2025/