ASX dividend shares could be good ideas for income and total returns at the current valuations.
There has been a lot of volatility in recent months. While volatility is unpredictable, it should be expected — there have been significant sell-offs on many previous occasions, including the COVID-19 crash and the global financial crisis.
For me, stock markets falling are a good time to be looking to buy shares. I'd rather buy shares when they're priced lower than when they are more expensive.
A bonus effect of lower share prices is that dividend yields are pushed up. So, not only can we buy companies at better value, but the cash returns of dividends are also bigger for new investors.
With that in mind, these are two ASX dividend shares I think look good value for attractive prospective income:
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Charter Hall Long WALE REIT (ASX: CLW)
This real estate investment trust (REIT) owns properties in various industries such as pubs and bottle shops, government office buildings, telecommunications properties, grocery and distribution, fuel and convenience, food manufacturing, waste and recycling, and 'other'.
Tenants include Endeavour Group Ltd (ASX: EDV), Australian federal government and state government entities, Telstra Corporation Ltd (ASX: TLS), BP, Inghams Group Ltd (ASX: ING) and Metcash Limited (ASX: MTS).
As the name suggests, its property portfolio has tenants signed up for long-term leases. The weighted average lease expiry (WALE) is around 12 years. I think that gives good rental security and visibility about future rental income.
The REIT notes that income growth is driven by annual rental increases in all its leases. It disclosed that 46% of leases are linked to CPI, while 54% are fixed with an average fixed increase of 3.1%. This can help drive rental profit and grow the ASX dividend share's distribution.
CMC markets has an estimated distribution of 28.6 cents per unit for FY23, translating into a forward distribution yield of 6.5%.
Brickworks Limited (ASX: BKW)
Brickworks has a number of quality divisions. So, the fact the Brickworks share price has dropped more than 20% since the start of 2022 makes it seem much more attractive to me.
It is the leading brickmaker in Australia with a number of brands including Austral Bricks. Brickworks also owns other building product brands including Bristle Roofing, Austral Precast, and Austral Masonry.
Another area of the business that's interesting is its US brickmaking division. After making a few acquisitions, it's the market leader in the country's northeast. The US is a huge market, so there is compelling potential growth there if it can grow its brickmaking business geographically and also add other building products.
But, for me, two divisions are key for paying the Brickworks dividend, which hasn't been cut for more than 40 years. The ASX dividend share has an investments division, which pays growing dividends to Brickworks. There's also an industrial property trust, of which it owns half.
The industrial property trust is building high-quality properties like high-tech warehouses for clients such as Amazon and Coles Group Ltd (ASX: COL).
There is reportedly strong demand for well-located logistics properties, which has helped increase the value of the properties and can help drive the rent higher in the coming years. In the FY22 half-year result, the net trust income rose 7% to $17 million.
The industrial property trust has several years of projects planned, including the Oakdale East estate.
Based on the CMC Markets estimated dividend per share of 63 cents, Brickworks offers a potential grossed-up dividend yield of 4.75% in FY22.
