Brokers rate these 2 ASX dividend shares as buys

Charter Hall Long WALE REIT is one of the ASX dividend shares brokers like.

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ASX dividend shares might be the way to grow income for investors who are looking to get more cashflow from their money. 

It’s the job of brokers to find businesses that might be opportunities on the share market. Some of those businesses currently pay a relatively high dividend yield.

Here are two that are liked by brokers:

Charter Hall Long WALE REIT (ASX: CLW)

This is one of the larger real estate investment trusts (REITs) on the ASX with a market capitalisation of just over $3 billion according to the ASX.

The aim of this REIT is to provide investors with stable and secure income, with the potential for both income and capital growth through an exposure to long weighted average lease expiry (WALE) properties.

The ASX dividend share is focused on owning assets that are predominately leased to tenants with strong covenants on long-term leases. This REIT is managed by Charter Hall Group (ASX: CHC).

Charter Hall Long WALE REIT recently had 458 properties, or 92% of the portfolio, independently valued for 30 June 2021. That resulted in a $373.4 million, or 7.6%, uplift on the prior book values. That saw the portfolio average capitalisation rate compress 38 basis points from 5.14% to 4.76%.

This update from the ASX dividend share saw the pro forma net tangible assets (NTA) per unit increase 12.8% from $4.65 to $5.24. It currently has a WALE of around 14 years.

Charter Hall Long WALE REIT is rated as a buy by the broker Citi because of its conservative guidance and strong rental income. The price target is $5.30. At the current share price, Citi thinks the dividend yield will be 6% for FY21 and 6.25% for FY22.

Waypoint REIT Ltd (ASX: WPR)

This is the largest REIT that gives pure exposure to fuel and convenience retail properties with a network across all Australian states and mainland territories.

Waypoint REIT’s stated objective is to maximise the long-term income and capital returns from its ownership of the portfolio for the benefit of all securityholders.

There is rental growth built into its contracts, predominately with tenant Viva Energy Group Ltd (ASX: VEA) and sub-tenant Coles Group Ltd (ASX: COL) with Coles Express.

It has an occupancy rate of 99.9%, a WALE of 10.8 years, with most of them (over 90%) having triple net leases.

The ASX dividend share is achieving attractive organic rental growth underpinned by a weighted average rent review of 2.9%. There is further growth potential through acquisitions and development.

It’s currently rated as a buy by Morgans, with a price target of $2.92. Morgans is expecting the FY21 and FY22 distributions to be 15.7 cents and 16.4 cents, equating to a distribution yield of 5.9% this financial year and 6.2% next financial year.

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Returns As of 15th February 2021

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. 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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