ASX dividend shares can be a way to generate income from businesses.
The two businesses in this article have relatively high dividend yields for investors to consider.
Here are two to think about:
Adairs Ltd (ASX: ADH)
Adairs is a retailer that sells homewares and furniture. This business sells products through both its stores and its online channel.
The Adairs share price dropped 11% yesterday. There was a broker downgrade of expectations for FY21 to FY23. Ord Minnett pointed out that Adairs did just settle its deferred payment to Mocka early, which implied that Mocka earnings are below the forecast.
In terms of the dividend, Adairs is expecting to pay a dividend of 26.50 cents per share in FY21. At this lower price, that translates to a grossed-up dividend yield of 9.3%. Then, in FY22, Ord Minnett is predicting a dividend per share of 25 cents – that translates to a forward grossed-up dividend yield of 8.8%.
Adairs is experiencing a high level of online sales, which is leading to a number of benefits. FY21 half-year group online sales were $90.2 million, representing 37.1% of total sales. Adairs online sales grew 95.2%, whilst Mocka sales (all online) rose 44.4%.
This online growth helped the ASX dividend share's underlying earnings before interest and tax (EBIT) rise 166% to $60.2 million, with statutory net profit after tax (NPAT) growth of 233.4%.
Adairs continues to invest in its digital transformational with money spent on acquiring customers, the customer experience, platform and team. It's opening a new large national distribution centre in Melbourne in early FY22 to make the business more efficient and save on costs.
Centuria Industrial REIT (ASX: CIP)
This is the largest pureplay real estate investment trust (REIT) in Australia that looks to invest in a portfolio of industrial properties.
It recently increased the size of its portfolio with more acquisitions. The business' portfolio is now worth over $3 billion, it owns 66 industrial properties.
The three industrial assets that it bought, were worth around $86.1 million, with a combined 5% initial yield and a weighted average lease expiry (WALE) of 5.8 years. Two of these properties were based in Melbourne, with the other being in Sydney.
Two of those additions were distribution centres, whilst one was a manufacturing facility. That manufacturing plant is leased to Rollease Acmeda, a global engineering, manufacturing and distributor of window coverings systems.
The fund manager of Centuria Industrial REIT, Jesse Curtis, said:
CIP's strategy is to secure high-quality industrial assets within key metropolitan locations and this portfolio transaction is in keeping with this direction. These acquisitions continue to build our strong track record of identifying value and providing value-add opportunities through repositioning and active leasing to deliver reliable income returns and capital growth to our unitholders.
Ord Minnett currently rates the ASX dividend share as a buy. In FY21, the broker is expecting the REIT to pay a distribution of 17 cents per share – that equates to a yield of 4.5%.
