Insights

Could industrial REITs be the best ASX shares to buy for dividends?

Industrial REITs have been reliable and consistent ASX dividend shares to own amid the COVID-19 pandemic. Here’s why.
The post Could industrial REITs be the best ASX shares to buy for dividends? appeared first on Motley Fool Australia. –

Folder for Real Estate Investment Trust such as Vicinity Centres

Social distancing and lockdown measures have caused many real estate investment trust (REITs) to defer dividends and fall out of favour. Industrial REITs could be a hidden gem within the real estate sector with reliable clients such as eCommerce, manufacturing, logistics and construction that have been able to carry out business as usual. 

The reliability of its clients could make industrial REITs some of the best ASX 200 dividend shares to buy right now. Let’s take a closer look.

Why are REITs struggling?

REITs typically maintain properties within the office, retail, industrial and residential sectors. Office and retail-oriented REITs have struggled through COVID-19 due to shopping centre closures, rental disputes and the shift to working from home. This has seen the likes of Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX) share prices fall more than 40% and defer interim dividends. 

In the case of Scentre Group, its April rental collection figures went as low as 28% of its regular monthly gross rental bills. There has since been a V-shaped recovery with August representing 86% of regular monthly gross rental bills. Despite the swift recovery, the impact throughout April and May has meant Scentre Group has opted to defer its interim dividend. I believe it could become difficult to gauge the reliability of dividends from office and retail REITs moving forward.

Enter industrial REITs

Industrial REITs such as Goodman Group (ASX: GMG), Centuria Industrial REIT (ASX: CIP) and APN Industria REIT (ASX: ADI) have not only outperformed the S&P/ASX 200 Index (ASX: XJO) but also maintained its all important dividend payment. The consistency of its cash flow and outperformance of the general market could make it an ASX 200 dividend share for yield focused investors. 

Centuria Industrial is one of Australia’s largest domestic pure play industrial REITs. The company has more than 50 high quality assets and a portfolio value of $1.6 billion as of 30 June 2020. 52% of portfolio income is derived from tenant customers directly linked to the production, packaging and distribution of consumer staples and pharmaceuticals. This includes high profile names such as Arnott’s, Visy, Australia Post and Toll. The company currently pays a dividend yield of 5.70%.  

Goodman Group on the other hand offers a much lower dividend yield but has provided more in terms of capital gains compared to the ASX 200 and its REIT peers. In FY20, the company delivered a 12.5% increase in operating profit driven by continued demand from several segments for both temporary and permanent space, and a general acceleration of requirements across the digital economy. Goodman could provide the best of both worlds with a small dividend yield of 1.70% and higher share price gains. 

Foolish takeaway

The high quality occupants for industrial REITs position them as both reliable ASX 200 dividend shares and potential for share price gains. For investors looking for lower risk companies with consistent cash flows, I would look at industrial REITs as an option. 

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Could industrial REITs be the best ASX shares to buy for dividends? appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!