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2 top ASX dividend shares to buy

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ASX dividend shares may be interesting to some income investors right now with how low interest rates are at the moment.

The Reserve Bank of Australia (RBA) official interest rate is now just 0.10%, which means that it’s hard to make a high level of income from some rate-linked investments.

ASX dividend shares may be an answer to grow income, such as these two:

Charter Hall Long WALE REIT (ASX: CLW)

This entity is a real estate investment trust (REIT) that’s managed by Charter Hall Group (ASX: CHC), one of the largest property managers in Australia which runs a variety of property strategies.

A few different brokers rate the Charter Hall Long WALE REIT share price as a buy, such as Citi which has a price target of $5.30.

Charter Hall Long WALE REIT runs a diversified property strategy. It isn’t just about retail properties, office properties or any particular sector.

WALE stands for weighted average lease expiry (WALE), which is how long its tenants are signed up for on the rental contracts.

The ASX dividend share has a portfolio of properties worth around $4.5 billion, with $1.5 billion in long WALE retail, $1.1 billion in industrials and logistics, $1 billion in office buildings, $643 million in telecommunications exchanges and $241 million in agri-logistics.

Some of the tenants at the REIT include Wesfarmers Ltd’s (ASX: WES) Bunnings, Westpac Banking Corp (ASX: WBC), Metcash Limited (ASX: MTS), David Jones, Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW), BP and Telstra Corporation Ltd (ASX: TLS).

Management reaffirmed that the target distribution payout ratio remains at 100% of operating earnings, which is expected to be at least 29.1 cents per security (up at least 2.8%). It was one of the few REITs that grew the dividend in 2020 during the COVID-19-affected year.

At the current Charter Hall Long WALE REIT share price, it has a distribution yield of 6.1%.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is the ASX dividend share with the longest dividend growth streak. The investment conglomerate has grown its dividend every year since 2000. Over the last 20 years, total ordinary dividends have grown at a compound average growth rate of 9.2%.

The company is focused on two main elements for shareholders. The first focus is growth in the capital value of the portfolio (measured by growth in the net asset value (NAV)). The other element is steady and growing dividends, paid from cash generation of the portfolio.

It owns a number of different sectors and businesses including telecommunications like TPG Telecom Ltd (ASX: TPG) and Tuas Ltd (ASX: TUA), building products and property with Brickworks Limited (ASX: BKW), resources with Round Oak Minerals and New Hope Corporation Limited (ASX: NHC) and financial services including Bki Investment Co Ltd (ASX: BKI), Pengana Capital Group Ltd (ASX: PCG) and 360 Capital REIT (ASX: TOT).

Some of the ASX dividend share’s recent investment focuses are agriculture and retirement living. In FY20 it invested $150 million into agriculture and it’s looking for more opportunities, current commodities include citrus, macadamias, table grapes, stone fruit and water. Soul Patts said that there’s strong demand globally for good quality Australian food products. The country has a global competitive advantage in agriculture according to management.

Regarding retirement living, it’s continuing to progress the Cronulla development and it’s working with Provectus to examine new opportunities for luxury independent living developments.

At the current Soul Patts share price, it has a grossed-up dividend yield of 2.9%.

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Returns As of 15th February 2021

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths Limited. 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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