I think these ASX 200 dividend shares look like good income picks after reporting

Both of these property plays have strong income potential.

| More on:
An industrial warehouse manager sits at a desk in a warehouse looking at his computer while the Centuria Industrial share price rises

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

Key points

  • Reporting season is giving investors an opportunity to look into ASX 200 dividend shares
  • Charter Hall Long WALE REIT has a 12-year WALE and expects to pay a distribution yield of 6.4% in FY23
  • Centuria Industrial REIT has an eight-year WALE and expects to pay a distribution yield of 5.35% in FY23

Reporting season is underway. At the current time, I think there are a few S&P/ASX 200 Index (ASX: XJO) dividend shares that could make solid picks for income at their current prices.

Examining results gives us a chance to get a look under the 'hood' of businesses. Companies that have been sold off over the last few months could be attractive opportunities because investors have put them on a lower valuation.

While not every business is worth buying just because it has fallen, I do believe that some of them may have been oversold.

In my opinion, there may be some real estate investment trusts (REITs) that now look like good ASX 200 dividend share opportunities because of investor concerns surrounding inflation and rising interest rates.

Here are two I've been looking at:

Charter Hall Long WALE REIT (ASX: CLW)

Since the end of April 2022, the Charter Hall Long WALE REIT share price has dropped almost 20%. That's a hefty drop for what is typically seen as a defensive sector. It's invested across a range of property sectors including industrial, retail, and agri-logistics.

In its FY22 result, the business noted that its operating earnings had grown by 4.5% and that the net tangible assets (NTA) per unit rose by 18.2% to $6.17.

The REIT noted that the portfolio weighted average lease expiry (WALE) was 12 years at year-end, which provides "long-term income security". I think this also provides useful visibility for the potential future distributions.

Rental income looks as though it's going to grow at a good pace. In FY22, 51% of leases were fixed with an average fixed increase of 3.1%, while 49% of leases were CPI-linked, up from 40% in FY21. The CPI-linked leases are expected to grow by 6.3% in FY23.

The ASX 200 dividend share is expecting to pay a distribution per security of 28 cents in FY23. That translates into a forward distribution yield of 6.4%.

Centuria Industrial REIT (ASX: CIP)

As the name suggests, this REIT is focused on industrial properties.

In FY22, its portfolio expanded to 88 "high-quality" industrial assets worth $4.1 billion. It had an 8.3-year WALE with a 98.8% portfolio occupancy.

Its NTA per unit increased by 11% to $4.24 and its funds from operations (FFO) (the net rental profit) rose 22%.

In FY23, the business is expected to generate FFO per unit of 17 cents and it expects to pay a distribution of 16 cents per unit. That would translate into a distribution yield of 5.35%.

The Centuria Industrial REIT share price has dropped almost 30% in 2022.

Jesse Curtis, the fund manager of the ASX 200 dividend share, gave commentary on the state of play for industrial property, which could also be applied to some of Charter Hall Long WALE REIT's properties:

Globally, industrial real estate continues to benefit from strong tailwinds. Increasing e-commerce, and securing supply chain resilience, are driving strong demand. Domestically, despite recording strong rental growth during FY22, Australia's industrial market continues to see robust tenant demand. Labour shortages, supply change disruption and limited industrial zoned land have resulted in new industrial accommodation being in short supply.

Coupled with sustained demand generated from trends of growing e-commerce adoption and increased reshoring, this is creating an environment for prolonged rental growth, particularly within urban infill markets where Centuria Industrial REIT has 85% of its portfolio.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

A mature woman holds a plate of cake and licks her thumb.
Dividend Investing

Want a 5% yield from US stocks like Amazon? Buy this ASX dividend share

It's possible to have your cake and eat it too.

Read more »

Man looking amazed holding $50 Australian notes, representing ASX dividends.
Dividend Investing

5 top ASX dividend shares to buy next week

Analysts have good things to say about these shares. Let's see what they offer.

Read more »

Young businesswoman sitting in kitchen and working on laptop.
Dividend Investing

Where I'd invest $5,000 into ASX dividend shares

I think these stocks are appealing options.

Read more »

Happy man holding Australian dollar notes, representing dividends.
Dividend Investing

Analysts say these ASX 200 dividend shares are top picks

Let's see why they are feeling bullish about these income options.

Read more »

Clock with post it as a reminder of Tax Time
Dividend Investing

Turn your tax return into passive income with these ASX dividend shares

These are some high paying dividend shares I’m keeping an eye on. 

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

These ASX dividend stocks offer 6%, 8% and 11% yields

Analysts are forecasting big yields from these buy-rated stocks.

Read more »

A man and woman sit next to each other looking at each other and feeling excited and surprised after reading good news about their shares on a laptop.
Dividend Investing

5 fantastic ASX ETFs to buy in June with $10,000

Let's see why these funds could be good picks.

Read more »

Male hands holding Australian dollar banknotes, symbolising dividends.
REITs

2 ASX REITs announcing new dividends today

Money, money, money!

Read more »