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This ASX dividend share has a very generous 5.9% yield

Woman holding up wads of cash

The Australian share market is home to a large number of companies that share their profits with investors in the form of dividends.

If you’re interested in getting a piece of the action, then you might want to take a look at Aventus Group (ASX: AVN).

Why Aventus?

Aventus is a fully-integrated owner, manager, and developer of large format retail.

Unlike many other retail landlords, Aventus has been performing very positively over the last 12 months. This is thanks largely to its exposure to the household goods sector, which is performing strongly during the pandemic.

In fact, last month the company released its half year results and revealed a small increase in revenue and a 43% lift in net profit to $103.4 million. The latter includes a $25.7 million increase in the net fair value of its property.

Excluding accounting adjustments, Aventus’ funds from operations (FFO) increased 6.5% to $55.9 million. Positively, more of the same is expected in the second half, with management upgrading its FFO growth guidance to 4% for the full year.

Goldman Sachs expects this to lead to a 16.6 cents per share full year dividend. Based on the latest Aventus share price of $2.81, this represents a generous 5.9% dividend yield.

The broker also sees upside for its share price. It has a buy rating and $3.04 price target on the company’s shares.

Why is the broker positive on Aventus?

Goldman Sachs explained that it believes the Aventus share price is trading at an attractive level based on its growth profile.

“We believe AVN’s recent strong performance reflects its diversified tenant base, lower rental point and better growth outlook (both organic and external), resulting in its strong positioning into 2H21 as Australia reopens. AVN’s multiple has recovered since its trough in March 2020, which was as a result to concerns surrounding economic uncertainty, retail exposure, and higher leverage at the onset of COVID-19 in Australia. Since then, the stock has re-rated higher, as traffic has picked up and retailer performance continues to improve.”

“We continue to believe AVN remains attractive, with its aforementioned organic and external growth strengths not currently reflected in its multiple – trading at 13x FY22e FFO – in line with our coverage average despite a two-year growth rate 1.8% above our A-REIT coverage average. Moreover, AVN remains attractive when screened against retail A-REIT peers.”

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Returns As of 15th February 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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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