Brokers have been perusing the ASX share market for opportunities that pay relatively high dividend yields to shareholders. These ASX dividend shares may be opportunities.
Some businesses have high dividend payout ratios, which can lead to higher dividend yields.
Janus Henderson Group (ASX: JHG)
Janus Henderson is a large, multi-national asset manager. It has more than US$500 billion of assets under management (AUM) and hundreds of investment professionals.
The brokers at Macquarie Group Ltd (ASX: MQG) rate the Janus Henderson business as a buy, with a price target of $56 for the next 12 months. That means there’s a potential upside of around 15%.
Janus Henderson reports its progress to investors each quarter. In the first quarter of 2021 to 31 March 2021, it said that its AUM increased by 1% to US$405.1 billion compared the prior quarter reflecting positive markets partially offset by net outflows of US$3.3 billion. However, Macquarie noted this was on the back of a strong prior quarter of inflows.
The fund manager noted that it is seeing “solid” long-term investment performance, with 62% and 70% of AUM outperforming relevant benchmarks over a three-year and five-year basis, respectively, at the end of the quarter.
Year on year, quarterly earnings per share (EPS) increased 52% to US$0.91. This funded a 6% increase in the quarterly cash dividend for the ASX dividend share to US$0.38 per share.
Based on Macquarie’s numbers, Janus Henderson is valued at 10x FY21’s estimated earnings with a projected dividend yield of 4.25%.
HomeCo Daily Needs REIT (ASX: HDN)
This is an Australian real estate investment trust (REIT) that invests in metro-located, convenience based assets across target sub-sectors of ‘neighbourhood retail’, ‘large format retail’ and ‘health & services’.
Morgans rates the ASX dividend share as a buy with a price target of $1.50 over the next 12 months. In FY22 it’s expecting a distribution of 8 cents per unit, which translates to a distribution yield of 5.9%.
The REIT’s portfolio has been built towards a focus of non-discretionary retail which is designed to provide exposure to defensive and sustainable income streams. Future growth potential is created through organic rental growth and acquisitions. The weighted average lease expiry (WALE) is over nine years.
HomeCo Daily Needs REIT is using the acquisition strategy to improve its scale. Last month it announced that it was acquiring seven large format retail assets for a total purchase price of $266.4 million, with a weighted average capitalisation rate of 6.75%. That acquisition was at a 6% discount to the independent valuations for FY21.
It also announced that it was acquiring the Armstrong Creek Town Centre for $55.6 million, representing a 6% capitalisation rate. It’s a newly completed Coles Group Ltd (ASX: COL) anchored neighbourhood centre which opened for trade in September 2020.
In FY21, it’s expecting to make funds from operations (FFO) per unit of at least 8.3 cents. That’s an increase of 24% compared to the FY21 PDS FFO of 6.7 cents per unit.
The ASX dividend share said that it has significant debt capacity to make further accretive acquisitions.