The 2 S&P/ASX 200 Index (ASX:XJO) shares in this article have high dividend yields. One idea is energy infrastructure share APA Group (ASX:APA).
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High-yielding S&P/ASX 200 Index (ASX: XJO) shares could be interesting in a world where many bank accounts offer a lower interest rate than the current rate of inflation.
The ASX 200 is full of businesses that have been running for many years and may be among the leaders in their industry in Australia or whichever location(s) they operate.
The below two ASX shares are on track to pay dividend yields of comfortably more than 5% in FY21.
APA Group (ASX: APA)
This ASX 200 share describes itself as a leading Australian energy infrastructure business. It owns and/or operates around $22 billion of energy infrastructure assets. APA boasts that its gas transmission pipelines span every state and territory on mainland Australia, delivering approximately half of the nation’s gas usage.
APA was one of the few ASX 200 businesses to increase its dividend, or distribution in APA’s case, during the COVID-19-affected year of 2020. Indeed, it has actually grown its distribution every year for a decade and a half.
In the FY20 result it grew its annual distribution by 6.4% to 50 cents per security, which was funded by an 8.3% increase in operating cashflow and a rise in net profit after tax (NPAT) of 10.1%.
APA said that the FY20 result demonstrated the strength and stability of its asset portfolio and low risk business fundamentals. Management also said that the balance sheet was in very good shape.
The ASX 200 share is currently looking at the US as an attractive opportunity, but its most recently announced energy projects are based in Australia.
In November 2020, APA announced a $460 million investment to build the Northern Goldfield Interconnect (NGI) to link with APA’s Goldfields Gas Pipeline (GGP) which in turn connects with APA’s Eastern Goldfields network, creating an interconnected pipeline which covers 2,690km from north to south and west to east.
APA thinks that with the depth and mix of projects expected to be delivered in this region, it expects the NGI will have a strong portfolio of long-term contracts in place by the time construction is complete in the middle of 2022.
After a 4.3% increase to the FY21 interim distribution, APA has a current yield of 5.5%
Charter Hall Long WALE REIT (ASX: CLW)
This is a ASX 200 dividend share that’s liked by a few different brokers right now including Morgan Stanley and Citi.
The concept of the real estate investment trust (REIT) is that it is invested in properties with high quality tenants on contracts with long tenancy agreements. At the end of December 2020, the weighted average lease expiry (WALE) had risen slightly to 14.1 years – up from 14 years.
Morgan Stanley said that the FY21 first half-year result was good, it was better than the broker was expecting. Citi thinks that the rest of the 2021 financial year looks positive because of the approximately $700 million of acquisitions that the REIT has made recently.
Two of those asset acquisitions have been the flagship David Jones store in Sydney and a portfolio of BP locations in New Zealand. Another acquisition by the ASX 200 share was spending $281.5 million on the Telstra Corporation Ltd (ASX: TLS) telephone exchange and data centre located at 76 to 78 Pitt Street in Sydney.
At the end of the half-year period, Charter Hall Long WALE REIT had an occupancy rate of 97.5% across 459 properties.
In the half-year report it grew the distribution by 3.6% year on year to 14.5 cents per security. The FY21 distribution is expected to be at least 29.1 cents. At the current Charter Hall Long WALE REIT share price, that translates to a distribution yield of 6.2%.
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Returns As of 15th February 2021
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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 APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.