There are some very good S&P/ASX 200 Index (ASX: XJO) shares that could be worth owning for income.
Some businesses are paying dividends with yields that are much higher than what other assets are paying right now.
The two ASX 200 shares in this article operate in fairly defensive and growing industries:
Centuria Industrial Reit (ASX: CIP)
This real estate investment trust (REIT) gives Aussie investors exposure to the largest domestic pure play industrial property investment vehicle.
It’s rated as a buy by UBS with expectations of more acquisitions and continuing high-quality tenants at its properties. The broker has a share price target for Centuria Industrial REIT of $3.38.
It currently owns around 60 industrial assets that are worth around $2.5 billion. The aim of the REIT is to grow both the income and capital value. It has around 90% of the portfolio weighted to Australia’s strong-performing eastern seaboard industrial markets. It currently has an occupancy rate of 97.7%.
Centuria Industrial Reit has a weighted average lease expiry (WALE) of 9.8 years, which has increased by 5.5 years since December 2016.
Whilst the portfolio has been growing, the gearing of the ASX 200 dividend share has been reducing. It has fallen 13.3 percentage points from 42.9% at December 2016 to 29.6% at December 2020.
The REIT’s net tangible assets (NTA) per unit has been steadily growing over time. In the FY21 half-year result it revealed that its NTA had grown year on year from $2.83 to $2.99.
Centuria Industrial Reit has upgraded its guidance twice for FY21. It’s now expecting FY21 funds from operations (FFO) to be no less than 17.6 cents per unit.
In FY21 the REIT is expecting to pay an annual distribution of 17 cents per unit, which equates to a distribution yield of 5.75% for income-seekers.
Bapcor Ltd (ASX: BAP)
Bapcor likes to describes itself as the leading auto parts business in Australasia. It operates a number of different brands including Burson, Precision Automotive Equipment, AAD, Bearing Wholesalers, Commercial Truck Parts, Autobarn, Autopro, Midas and ABS.
It’s one of the few ASX 200 shares that grew the dividend in FY21, even if it was just an increase of 2.9%.
The FY21 dividend is shaping up to be a much larger increase after a half-year dividend increase of 12.5%.
There was particularly strong growth in its retail businesses during the six-month period with Autobarn same store sales up 37.1%.
Bapcor still has a large growth targets. Over the next five years it wants to increase its number of trade stores from 195 to 240, whilst also growing the percentage of own brand sales from 29% to 35%.
For its commercial vehicle segment, it wants to reach 40 light vehicle locations (currently 16) and 50 heavy vehicle locations (currently 31).
Looking at Autobarn, it wants to reach 200 Autobarn stores, it currently has 133. It’s targeting 500 service locations, which would be an increase from the current 105.
One growth area that the ASX 200 share is really targeting is South East Asia. It now has six locations in Thailand, but it wants to reach at least 80.
In the FY21 half-year result it saw revenue growth of 25.8% to $883.6 million, earnings before interest and tax (EBIT) growth of 45% and net profit growth of 49.7%.
Based on the last 12 months of dividends, it has a grossed-up dividend yield of 3.9%.
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Returns As of 15th February 2021
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. 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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