These 2 ASX dividend shares are rated as buys

These 2 ASX dividend shares could be income ideas.

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A money jar filled with coins, indicating an investment return from an ASX dividend share

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ASX dividend shares could be a useful place to look for ideas to boost investment income.

Some businesses have dividend yields that are more than 5%, which is a lot more than what someone can get from a savings account at the moment.

However, just because a business pays a dividend or distribution, doesn’t necessarily make it a buy for income. But there are analysts out there are on the lookout for opportunities, which may also have high dividend yields.

These are two that are currently rated as buys:

Waypoint REIT Ltd (ASX: WPR)

Waypoint is a business that owns a large portfolio of petrol service stations across Australia’s road networks. Its stated objective is to maximise the long-term income and capital returns from its ownership of the property portfolio.

The business has been busy maximising value for investors. In its half-year result it told investors it had sold 37 non-core assets for a total of $132 million, representing a premium of almost 11% to the prevailing carrying value.

The ASX dividend share is also benefiting from rising asset prices – the gross valuation uplift for the six months to 30 June 2021 was $189.8 million, helping its net tangible assets (NTA) increase 10.4% to $2.75 per security.

Waypoint says that it offers secure rental income with embedded growth, underpinned by long-term leases to quality tenants.

At 30 June 2021, it had a 99.9% occupancy rate, a 10.5 year weighted average lease expiry (WALE) and “strong” organic rental growth unpinned by a weighted average rental review (WARR) of 2.9%. Viva Energy Group Ltd (ASX: VEA) is the key tenant.

In FY21, it’s expecting to grow its distributable earnings per security to a range of between 15.72 cents to 15.8 cents. That’s growth of between 3.75% to 4.25%.

The broker Morgans rates Waypoint REIT as a buy. In FY22 the broker thinks Waypoint will pay a distribution of 16 cents per security, which is a forward yield of 5.9%.

Stockland Corporation Ltd (ASX: SGP)

Stockland is a diversified property business with a few different segments including residential communities, retirement living communities, land lease and commercial property (predominately retail town centres).

It’s currently rated as a buy by Citi. Stockland is expected to pay a FY22 payout of 28 cents per security. That translates to a forward yield of 6%.

The ASX dividend share generated $1.1 billion of statutory profit, though funds from operations (FFO) fell 4.6% to $788 million, or 33.1 cents per security. It also generated $1 billion of operating cashflow.

In FY22, it’s expecting to generate FFO per security in a range of 34.6 cents to 35.6 cents. The distribution per security is forecast to be within a target payout ratio of between 75% to 85% of FFO.

Residential settlements are expected to be around 6,400 lots. The residential operating margin is expected to be around 18%. It’s also expecting land lease communities to deliver 300 settlements in FY22. The business has a $33 billion pipeline of work.

However, Stockland says that current market conditions remain challenging.

Should you invest $1,000 in Stockland right now?

Before you consider Stockland, you'll want to hear this.

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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 has no position in any of the stocks mentioned. 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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