Metcash and Charter Hall Long WALE REIT could both be good options for income.
The post These 2 ASX dividend shares could be high-quality picks for income appeared first on The Motley Fool Australia. –
There are a number of quality ASX dividend shares that could be good picks for longer-term income.
These are defensive businesses with pretty reliable demand and a commitment to paying shareholders a high level of annual profit.
Here are two relatively large businesses to consider:
Charter Hall Long WALE REIT (ASX: CLW)
This ASX dividend share is a real estate investment trust (REIT). It targets a distribution payout rate of 100%. The business owns a diversified property portfolio in Australia and New Zealand across office, industrial, diversified long weighted average lease expiry (WALE) retail, hospitality, convenience retail, social infrastructure and agri-logistics.
The goal of Charter Hall Long WALE REIT is to provide investors with stable and secure income and the potential for both income and capital growth through exposure to a portfolio of high-quality properties and tenants that are signed up to long contracts.
Its WALE at the latest disclosure was 12.6 years, which provides a high level of “security and continuity of income” for investors. It has a number of resilient, high profile customers – it received 100% of its net recent during COVID. Two of its largest tenants includes Telstra Corporation Ltd (ASX: TLS) and Endeavour Group Ltd (ASX: EDV).
The ASX dividend share has annual rental escalation which is delivering organic growth.
In FY22 it is expecting to achieve FY22 operating earnings per security (EPS) growth of at least 4.5% compared to FY21 operating EPS of 29.2 cents. At the current Charter Hall Long WALE REIT share price, that represents a distribution yield of 6.25%.
It’s currently rated as a buy by Citi, which expects it to pay a distribution per unit of 31.9 cents in FY23.
Metcash Limited (ASX: MTS)
Metcash is a diverse that owns or supplies various businesses across food, liquor and hardware including: IGA, Foodland, Cellarbrations, The Bottle-O, IGA Liquor, Duncans, Thirsty Camel, Mitre 10 and Total Tools.
The company recently decided to increase its target dividend payout ratio from 60% to 70% of net underlying profit after tax (as well as announcing a $200 million off-market buy-back). This further increases dividend payouts for investors.
This ASX dividend share has a number of initiatives to improve the business including store upgrade programs, rolling out new store formats, expanding its private and exclusive label ranges and accelerating its digital plans. It’s also looking to retain new and returned customers gained through COVID.
It is also pursuing attractive growth opportunities, such as the acquisition of Total Tools.
UBS currently rates Metcash as a buy, with a price target of $4.60, which likes the growth prospects of the hardware division.
According to the broker, Metcash is valued at 16x FY22’s estimated earnings with a grossed-up dividend yield of 4.4% for FY22.
The post These 2 ASX dividend shares could be high-quality picks for income appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.