2 ASX dividend shares to buy with yields above 5%

These 2 ASX dividend shares both have yields of more than 5%, including property owner Charter Hall Long WALE REIT (ASX:CLW).
The post 2 ASX dividend shares to buy with yields above 5% appeared first on The Motley Fool Australia. –

large goklden symbol of 5% representing yield of dividend shares

The two ASX dividend shares in this article offer yields of more than 5%.

The Reserve Bank of Australia (RBA) has pushed interest rates to almost 0% with a goal of cushioning the economy.

That strategy has worked, though the interest rate remains low and this is making it difficult to make income from cash in the bank.

Businesses with dividend yields of more than 5% could be a way to boost investment income:

Charter Hall Long WALE REIT (ASX: CLW)

This a real estate investment trust (REIT) managed by Charter Hall Group (ASX: CHC).

As the name suggests, its aim is to hold a real estate portfolio of commercial properties with tenants that are signed up to long-term rental contracts. That results in the REIT having a long weighted average lease expiry (WALE).

Some of the tenants that are at the properties include Australian government entities, Telstra Corporation Ltd (ASX: TLS), Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL), Inghams Group Ltd (ASX: ING) and David Jones.

The ASX dividend share has a made a number of acquisitions that has boosted the portfolio’s strength and diversification.

Its rental profit is slowly but steadily growing from organic rental increases at the properties.

The business has a 100% distribution payout for investors. This leads to a relatively high yield.

In FY21 management are expecting to generate operating earnings per security (EPS) of at least 29.1 cents. That translates to a distribution yield of at least 6% for the current financial year.

It’s currently rated as a buy by the broker Morgan Stanley with a price target of $5.35.

Nick Scali Limited (ASX: NCK)

Nick Scali is a business that sells high-quality imported furniture.

The business has seen booming sales over the last 12 months as people look to improve their homes during this COVID-19 pandemic period.

Nick Scali’s sales weren’t slowing down by the time of its FY21 half-year report. Indeed, in a recent trading update it said its FY21 third quarter total written sales order growth was 50%. April growth was 242% compared to the locked down period of April 2020.

The strength of the ASX dividend share’s sales and demand have led to Nick Scali margins increasing substantially. In that recent trading update, Nick Scali said that net profit after tax (NPAT) growth is expected to be in the range of $78 million to $80 million, which would be an increase of 85% to 90%.  

Retail shares tend to be valued at a relatively low price/earnings ratio multiple. Plus, Nick Scali has a reasonably high dividend payout ratio. That results in the ASX dividend share offering a trailing grossed-up dividend yield of 8.4%.

It’s trying to improve profit and accessibility to more customers by expanding its store network across Australia and New Zealand, as well as growing online sales.

Nick Scali is currently rated as a buy by the broker Citi, with a price target of $12.05.

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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 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 to buy with yields above 5% appeared first on The Motley Fool Australia.

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