These 2 S&P/ASX 200 Index (ASX:XJO) dividend shares could be worth buying for income, including Brickworks Limited (ASX:BKW).
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There are a few high-quality S&P/ASX 200 Index (ASX: XJO) dividend shares that could be worth owning for income.
Not every that pays a dividend may be worth owning for income – dividends can be volatile and business profits can go backwards, which may lead to dividend cuts down the line.
These two ASX 200 dividend shares have demonstrated resilience over the past year:
Charter Hall Long WALE REIT (ASX: CLW)
Morgan Stanley currently rates the REIT as a buy with a price target of $5.35.
It isn’t based on one particular real estate sector. It’s actually invested in a broad array of properties such as telecommunications, government (office) buildings, grocery and distribution, fuel and convenience stores, pubs and bottle shops, food manufacturing, waste and recycling management and ‘other’ such as retail, banking finance and security and defence services.
What all of its properties do have in common are long term rental contracts, which is shown in the Charter Hall Long WALE REIT’s weighted average lease expiry (WALE) of 14.1 years. This is one of the longest in the sector.
It was one of the few REITs to increase its distribution to shareholders during the COVID-19-hit year of 2020.
The ASX 200 dividend share has an impressive list of “strong and stable” tenants such as Telstra Corporation Ltd (ASX: TLS), Australian government entities, BP, Woolworths Group Ltd (ASX: WOW), Ingham’s Group Ltd (ASX: ING), Coles Group Ltd (ASX: COL) and David Jones.
Morgan Stanley believes that Charter Hall Long WALE REIT will pay a distribution of 29.2 cents per unit in FY21, which equates to a forward distribution yield of 6.1%.
Brickworks Limited (ASX: BKW)
Brickworks was another business that didn’t cut its dividend during 2020. In-fact, it increased the dividend during the roughest part of the COVID-19 crash in March 2020.
Whilst the company is now seeing a recovery of demand from customers in Australia for building products, the US division is (or was) facing difficulty at the time of the last trading update. The company is due to release its FY21 half-year result this week, so we’ll get a closer look at how things are going.
Brickworks owns a variety of Australian building brands like Austral Bricks, Austral Masonry, Bristle Roofing, Austral Precast and Pronto Panel.
In the US it owns a few brickmakers such as Glen Gery after acquiring them.
But it’s the other Brickworks assets that fund the dividend, which hasn’t been cut in over 40 years.
Brickworks owns around 40% of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which itself has been a reliable dividend payer over the last two decades thanks to its diversified and defensive portfolio of assets.
The ASX 200 dividend share also owns half of a growing industrial property trust along with Goodman Group (ASX: GMG). The concept is that the joint venture builds high-quality industrial properties on land that Brickworks no longer needs.
Two tenants that the industrial trust will soon have is Coles and Amazon. Once the warehouses are completed over the next couple of years, it could lead to rental profit to Brickworks growing by more than 25%.
At the current Brickworks share price, it has a grossed-up dividend yield of 4.5%.
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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and Washington H. Soul Pattinson and Company 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.
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