Insights

2 ASX dividend shares with large yields and consistent payouts

Magellan is one of the ASX dividend shares with a large and pretty consistent dividend.
The post 2 ASX dividend shares with large yields and consistent payouts appeared first on The Motley Fool Australia. –

There are some ASX dividend shares that have large yields and have been paying consistent dividends to investors.

In this era of low interest rates and unpredictability, businesses with high yields and growth could be worth thinking about for income.

Here are two of them:

Charter Hall Long WALE REIT (ASX: CLW)

This is a large real estate investment trust (REIT) that has a diverse property portfolio across a number of different sectors. Those sectors include agri-logistics, hospitality, convenience retail, diversified long weighted average lease expiry (WALE) retail, industrial, office and social infrastructure.

But the thing that all of the properties have in common is a long-term WALE, which gives strong income visibility. The WALE is currently approximately 12.6 years with a weighted average rent review of 2.9%. It has an occupancy rate of 98.4%.

It’s regularly making acquisitions to improve and diversify its portfolio and rental income. For example, it recently entered into an agreement to buy half of ALE Property Group (ASX: LEP). It has a national portfolio of 78 high-quality pubs that are leased to Endeavour Group Ltd (ASX: EDV).

The ASX dividend share’s latest acquisition is the Toyota distribution centre in Larapinta, Queensland.

Charter Hall Long WALE REIT has a 100% distribution payout ratio policy. It’s expecting to grow its FY22 operating earnings per security (EPS) by at least 4.5% compared to FY21. That translates to a FY22 yield of 6.2%.

It’s currently rated as a buy by the broker Citi with a price target of $5.59.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is one of the largest fund managers on the ASX. According to the ASX, it has a market capitalisation of $6.1 billion.

In FY21, Magellan grew its total interim and final dividend by 8% to 199.7 cents. That excludes the annual performance fee dividend. The funds management business within Magellan saw a 10% increase of profit before tax and before performance fees to $526.6 million.

One of the things that dragged on the profitability in FY21 was the share of losses from its ‘associates’ which amounted to $41.8 million. The loss predominately related to Barrenjoey, the new investment bank. Magellan has also invested in the Finclear and Guzman y Gomez businesses. The ASX dividend share is pleased with the progress of all three businesses.

In FY21, it ended with funds under management (FUM) of $113.9 billion, whilst average FUM for the last financial year was $103.7 billion. At 30 September 2021, Magellan had $113.3 billion of FUM

Magellan said that it recently secured its first two investment mandates for its global sustainable strategy, whilst no institutional mandates were lost during the quarter. However, in the first three months of FY22, it did see net outflows of $1.53 billion.

One of the brokers that currently rates Magellan as a buy is Macquarie Group Ltd (ASX: MQG) with a price target of $38. It’s expecting more outflows in FY22, but thinks it looks good value now.

Macquarie thinks that Magellan is priced at 14x FY22’s estimated earnings with a partially franked dividend yield of 6.9%.

The post 2 ASX dividend shares with large yields and consistent payouts appeared first on The Motley Fool Australia.

Should you invest $1,000 in Magellan right now?

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Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Magellan wasn’t one of them.

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More reading

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Why Fletcher Building, Magellan, Sezzle, & Starpharma are racing higher

Motley Fool contributor Tristan Harrison owns shares of Magellan Financial Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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