The two ASX shares in this article could be ideas for dividends.
Income is difficult to come by when it comes to assets other than ASX dividend shares because of how low the Reserve Bank of Australia (RBA) interest rate is.
Some businesses are rewarding investors quite handsomely each year with dividends or distributions from their profit.
These two ASX dividend shares could be ones to think about:
Accent Group Ltd (ASX: AX1)
Accent Group is one of the businesses that is seeing an enormous level of online sales growth, which is driving margins and profit higher.
Digital sales grew by 110% year on year to $108.1 million, this represented 22.3% of total sales. Total sales only went up by 6.6% to $541.3 million.
The gross profit margin improved by 140 basis points to 58.1%. The company said that inventory was clean with a strong in-stock position going into the second half of FY21.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) went up by 44% to $97.5 million and earnings before interest and tax (EBIT) grew by 47.3% to $81.8 million.
The bottom line grew even faster. Net profit after tax (NPAT) grew 57.3% to $52.8 million and earnings per share (EPS) rose 56.9% to 9.76 cents. It’s these profitability metrics that allow the board to declare stronger dividends.
The ASX dividend share decided to pay an interim dividend of 8 cents per share, representing a 52.4% increase.
In the first eight weeks of the second half of FY21 like for like sales were up 10.7%, with digital sales 65.4% higher than last year.
Using the dividend estimate on Commsec, at the current Accent share price it has a projected FY21 grossed up dividend yield of 7.5%.
Charter Hall Long WALE REIT (ASX: CLW)
This real estate investment trust (REIT) is one of the largest on the ASX. It’s run by property manager Charter Hall Group (ASX: CHC).
One the brokers that likes this ASX dividend share is Citi, which has a share price target of $5.30 for Charter Hall Long WALE REIT.
The idea of this REIT is that it owns a diversified property portfolio and has tenants on long-term leases. Some tenants include Telstra Corporation Ltd (ASX: TLS), Australian government entities, BP, Woolworths Group Ltd (ASX: WOW), Ingham’s Group Ltd (ASX: ING) and Coles Group Ltd (ASX: COL).
In the half-year result, Charter Hall Long WALE REIT said that it had a weighted average lease expiry (WALE) of 14.1 years.
After a number of acquisitions over the last year, it now has a portfolio worth around $4.5 billion, with more than half of the portfolio having triple net lease (NNN) exposure.
The ASX dividend share also recently announced that it had secured $500 million of long-term debt. The seven-year notes worth $300 million were priced at a fixed rate of 2.09% and the 10-year notes worth $200 million were priced at fixed rate of 2.79%. This increases the average debt maturity from 4.1 years to 5.2 years, with an weighted average cost of debt of 2.3%.
Citi thinks that the acquisitions will help earnings in FY21 and it’s expecting operating EPS of 29.3 cents. This translates to a forward distribution yield of 6.3% at the current Charter Hall Long WALE REIT share price.