There are a handful of S&P/ASX 200 Index (ASX:XJO) shares that are offering investors good income and growth for the long-term.
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There are a handful of S&P/ASX 200 Index (ASX: XJO) shares that could be reliable and offer investors good income.
It’s particularly difficult to find good sources of income at the moment because of how low the official Reserve Bank of Australia (RBA) interest rate is and how high share prices of many businesses have gone.
These two could be worth looking at for income:
Centuria Industrial REIT (ASX: CIP)
It owns a portfolio of quality industrial assets that are located in important city locations throughout Australia, with a strong and diverse tenant base.
Centuria Industrial REIT is currently rated as a buy by a few different brokers, including Morgan Stanley which has a price target of $3.77 on the ASX 200 share.
It’s regularly expanding its portfolio with acquisitions. For example, it recently announced an eight-hectare land acquisition in Dandenong for $26.3 million and has entered into a development management agreement (DMA) to fund six high-quality industrial facilities. Centuria described this as a rare opportunity.
That deal increased its portfolio to 63 assets and a portfolio value (on completion) to $2.7 billion.
In its quarterly update to 31 March 2021, Centuria Industrial REIT said that it saw a $196 million valuation uplift, or 8.3% on a like for like basis from prior book values. At the time, it said that its occupancy rate had increased to 98.8% with a 9.7 year weighted average lease expiry.
The distribution is expected to be 17 cents per unit, which equates to a yield of 4.9%. Management said it’s well positioned to keep delivering secure income and capital growth for investors.
Magellan Financial Group Ltd (ASX: MFG)
Magellan is an ASX 200 share that aims to pay a high dividend to investors.
Its dividend policy is to pay interim and final dividends based on 90% to 95% of the profit of funds management business excluding crystallised performance fees. With the performance fees, it aims to pay 90% to 95% of net crystallised performance fees after tax as a dividend.
The performance fees can be variable, but the core management earnings continue to remain strong and growing, which is what funds the main part of Magellan’s annual dividend.
The FY21 half-year result saw profit before tax and performance fees of the funds management business saw 8% growth to $256.2 million. Diluted earnings per share (EPS) grew 2% to 110.6 cents. This gave the board the room to grow the interim dividend by 5% to 97.1 cents.
The underlying management profit could continue to rise with the total funds under management (FUM) rising by around $5.4 billion to $106 billion at the end of March 2021.
Magellan also has plans to grow its profit with other initiatives such as a retirement product and investments into operating businesses like Barrenjoey, Guzman y Gomez and Finclear.
Morgans rates the ASX 200 share as a buy with a price target of $58.26. The broker expects the fund manager to pay a dividend of $2.06 per share in FY21, amounting to a partially franked dividend yield of 4.4%.
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Returns As of 15th February 2021
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Motley Fool contributor Tristan Harrison owns shares of Magellan Financial Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.