In this writer's opinion, ASX dividend shares can be good investment picks amid the current ASX share market volatility.
Businesses that are paying investors cash every six (or three) months can provide 'real' returns even as share prices go down (and up).
While dividend shares may not have as much growth potential as ASX growth shares, I think they have the potential to be more consistent. Is consistency important? I believe it can be useful when it comes to the overall unpredictability of the ASX share market.
Which ASX dividend shares are worth looking at? I think yes, if they are shares that have demonstrated strength and have attractive futures.
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Brickworks Limited (ASX: BKW)
Brickworks is one of my favourite ASX dividend shares for a few reasons.
I like its dividend record. The business has maintained or grown its dividend every year for over 40 years. It was one of the few S&P/ASX 200 Index (ASX: XJO) shares to increase its dividend during the COVID-hit year of 2020.
Another thing I like about Brickworks is that it has a diverse array of assets.
The long-term investments division has created capital growth and growing dividends for Brickworks.
I really like the prospects of the industrial property segment where it has a joint venture partnership with Goodman Group (ASX: GMG). The partnership builds large industrial properties on land that Brickworks no longer needs. There is strong demand by businesses for industrial properties to improve logistics and e-commerce capabilities. It has enough land for a multi-year pipeline of projects.
The United States building products segment has a lot of potential considering the size of the market due to the considerable population.
I also like how the Australian building products division is trying to unlock value by selling its operating buildings and land into a new joint venture trust with Goodman. This will enable Brickworks to unlock the value of that real estate.
At the current Brickworks share price it has a trailing grossed-up dividend yield of 4.25%.
Centuria Industrial REIT (ASX: CIP)
This ASX dividend share is a real estate investment trust (REIT). It's one of the largest owners of industrial properties on the ASX.
The business has built a base of quality tenants. Its portfolio occupancy rate is 98.5% and it has a weighted average lease expiry (WALE) of 8.7 years. This means it has long-term visibility of its rental income.
Fund manager Jesse Curtis explained how its assets are benefitting from being located in areas with low vacancy rates and limited supply and are positioned to benefit from rising rents:
The increasing trend of onshoring and reshoring supply chains to ensure business continuity, together with continued adoption of e-commerce, has further accelerated demand for last mile, infill locations that are in close proximity to densely population areas. Not only do last mile locations ensure quicker delivery timeframes but with rising costs, reduced transportation time is a growing consideration for operations.
The REIT is expecting to pay a distribution of at least 17.3 cents per unit for FY22. That translates into a yield of 5%. I think the business can achieve slow-but-steady distribution increases from here. That's thanks to the demand for quality industrial properties in metropolitan areas.
Having said that, rising interest rates could be a shorter-term headwind for the business.
