Any ASX investment – whether that be an ASX share or an ASX real estate investment trust (REIT) – that seemingly offers a dividend yield of 7.89% is going to attract at least some attention.
After all, that kind of yield is rather unusual on the ASX, at least outside those shares that have a high chance of turning out to be a yield trap.
Yet that's exactly what investors eyeing off the Charter Hall Long WALE REIT (ASX: CLW) will notice today.
The Charter Hall Long WALE REIT is a real estate investment trust that holds a portfolio of property assets that all share relatively long weighted average lease expires (WALEs). These include offices, shopping centres, industrial warehouses and hotels.
Long WALE REIT units finished trading on Monday flat at $3.42. At this pricing, this ASX REIT is trading on a trailing dividend distribution yield of 7.75%.
To be fair, this yield comes without the franking credits that most income investors enjoy alongside their regular dividend income from ASX shares. But this is the case for almost all ASX REITs, so we can't hold that against Charter Hall.
This high dividend yield is no illusion. It stems from the Long WALE REIT's last four quarterly dividend distributions. Those consisted of three payments worth 6.5 cents per share (the latest of which is due on 15 May later this month), as well as the 7 cents per share distribution from last August.
But, as most dividend investors would know, a trailing dividend yield doesn't guarantee that new investors can expect to receive that same yield going forward.
Even so, one ASX expert is calling the Charter Hall Long WALE REIT a buy anyway.
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ASX expert names Long WALE REIT as a buy today
As reported by The Bull, Dylan Evans, of Catapult Wealth, has recently named the Charter Hall Long WALE REIT as one of his buy recommendations. Evans cited the Long WALE REIT's low exposure to office properties, as well as the REIT's 99% occupancy rate, as being central to his bullish outlook. Here's what he said in full:
CLW is a diversified real estate investment trust. A key attraction is a quality property portfolio with an occupancy rate of 99 per cent. An average lease expiry of 10.8 years provides long term income security. Office exposure is only 18 per cent in an environment of more people working from home.
CLW has struggled in the past two years in response to rising bond yields. But the stock is appealing at these levels. The dividend yield was recently above 8 per cent. Also, any asset sales to lower debt would be positive for the stock.
No doubt Charter Hall investors will welcome this sunny appraisal. However, whilst longer-term investors have enjoyed healthy dividend income recently, the Long WALE REIT remains down 23.49% over the past five years. Only time will tell if Evans is on the money with this one.
