There are a few S&P/ASX 200 Index (ASX: XJO) dividend shares that have relatively high dividend yields.
Businesses in the ASX 200 are large enough where they are normally generating high levels of cashflow and can fund sizeable dividends.
These two businesses have high dividend payout ratios and high dividend yields:
Charter Hall Long WALE REIT (ASX: CLW)
This is a real estate investment trust (REIT) which is managed by Charter Hall Group (ASX: CHC).
It aims to invest in high quality real estate assets that are predominantly leased to corporate and government tenants on long term leases. It actually has one of the longest weighted average lease expiry (WALE) in the REIT industry, of 14.1 years.
The ASX 200 dividend share has 459 properties worth $4.48 billion.
Those properties are spread across a number of resilient and defensive sectors. Its income exposure is spread across the following: telecommunications (17%), government (15%), grocery and distribution (14%), fuel and convenience (13%), pubs and bottle shops (12%), food manufacturing (10%), waste & recycling (2%) and ‘other’ (16%). ‘Other’ includes retail, banking, finance and security and defence services.
Major tenants include Telstra Corporation Ltd (ASX: TLS), Australian government entities, BP, Woolworths Group Ltd (ASX: WOW), Inghams Group Ltd (ASX: ING), Coles Group Ltd (ASX: COL), David Jones, Metcash Limited (ASX: MTS), Arnott’s Group, Westpac Banking Corp (ASX: WBC) and Bunnings.
The FY21 half-year result saw continued growth of the business despite all of the COVID-19 impacts. HY21 saw operating earnings per security (EPS) increase by 3.6% to 14.5 cents. The distribution also grew 3.6% to 14.5 cents because it has a 100% payout ratio. It also grew its distribution during 2020 despite COVID-19.
In FY21, it’s expecting to increase its operating EPS by at least 2.8% to 29.1 cents, which translates to a forward distribution yield of 5.9%.
The ASX 200 dividend share is rated as a buy by Morgan Stanley.
Magellan Financial Group Ltd (ASX: MFG)
It generates most of its revenue and profit from managing a large pool of capital for investors. In the latest monthly update for March 2021, Magellan saw its total funds under management (FUM) increase by $5.4 billion, with $206 million of net inflows.
The leadership team are always looking for new and innovative ways to service clients and financial planners. The restructuring of its global equity funds was one example.
It’s currently working on launching a retirement product, it just needs approval from regulators.
The ASX 200 dividend share is also looking for businesses to take investments in. They have to be high quality businesses with meaningful scale, provide attractive returns and contribute intellectual capital.
For example, it has taken a $156 million investment in Barrenjoey. It has also invested $20 million in Finclear, as well as taking a stake in Guzman y Gomez.
In the FY21 half-year result it decided to grow the interim dividend by 5% to 97.1 cents per share.
It’s currently rated as a buy by Morgans, with a price target of $58.26. The broker expects the FY21 dividend to be $2.06, which would be a partially franked dividend yield of 4.25%.
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Motley Fool contributor Tristan Harrison owns shares of Magellan Financial Group. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.