2 ASX dividend shares rated strong buys by brokers

The ASX dividend shares in this article have been rated as strong buys by brokers. One of those income picks is Super Retail Group Ltd (ASX:SUL).
The post 2 ASX dividend shares rated strong buys by brokers appeared first on The Motley Fool Australia. –


There are some ASX dividend shares that a number of brokers like and have rated as ‘buys’

It can be quite hard to find good businesses that are trading at a good price. One investor might say that BHP Group Ltd (ASX: BHP) is a good buy, whilst another might say that Woolworths Group Ltd (ASX: WOW) is the share to buy.

Brokers are constantly looking at businesses and share prices, thinking about what would be a good investment. There are various brokers out there like Bell Potter, Macquarie Group Ltd (ASX: MQG) and UBS that provide different recommendations about shares.  

With that in mind, these ASX dividend shares are liked by more than one broker. Of course, this still isn’t a guarantee of success – they could all be herding together.

Charter Hall Long WALE REIT (ASX: CLW)

This ASX dividend share is a real estate investment trust (REIT) that is managed by Charter Hall Group (ASX: CHC). It has a diversified portfolio of 459 properties, with 75% of those located on the eastern seaboard.

Those properties are spread across different sectors including agri-logistics, telco exchanges, office, industrial and logistics and long WALE retail. Its total portfolio has a valuation of $4.5 billion.

This REIT is currently liked by at least three brokers, including Morgan Stanley.

In the just-announced FY21 half-year result, the weighted average lease expiry (WALE) increased slightly to 14.1 years, which is one of the longest on the ASX. It has an occupancy rate of 97.5%.

It has large and stable tenants including Telstra Corporation Ltd (ASX: TLS), Australian government entities, BP, Woolworths, Ingham’s Group Ltd (ASX: ING), Coles Group Ltd (ASX: COL) and David Jones.

In the half-year result, the ASX dividend share reported a 3.6% increase of operating earnings per share (EPS) to 14.5 cents per unit, a 3.6% increase of the distribution to 14.5 cents per unit and a 5.1% increase of the net tangible assets (NTA) per unit to $4.70.

Charter Hall Long WALE REIT reaffirmed its guidance that operating EPS will be at least 29.1 cents per unit, equating to a FY21 distribution yield of at least 6.2%.

Super Retail Group Ltd (ASX: SUL)

Super Retail is currently one of the retailers that is experiencing elevated levels of sales during these unprecedented COVID-19 times. It’s known for four businesses: Supercheap Auto, BCF, Rebel and Macpac.

This ASX dividend share is currently liked by at least four brokers, including Citi.

The company recently gave a trading update for the 26-week period ending 26 December 2020. It said that it had achieved a record result driven by large consumer demand. Group sales were up 23% and like for like sales increased by 24%. Online sales went up 87% to $237 million.

Not only did sales rise, but the profit margins increased as well. The overall gross profit margin went up by 270 basis points compared to the prior corresponding period, supporting higher earnings before interest and tax (EBIT) margins across all four core brands.

Looking at the individual businesses, Supercheap Auto total sales rose 20%, Rebel sales went up 15%, BCF sales grew 51% and Macpac sales declined 5%.

Underlying EBIT for the ASX dividend share is expected to be in a range of between $253 million to $256 million, which would represent growth of 119% to $122%. Underlying net profit after tax (NPAT) is expected to be in a range of $174 million to $177 million – this would be growth of between 135% and 139%.

At the current Super Retail share price, it has a projected (by Citi) grossed-up dividend yield for FY21 of 9.6%.  

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Super Retail Group Limited, and Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 ASX dividend shares rated strong buys by brokers appeared first on The Motley Fool Australia.

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