Key points
- These two ASX dividend shares are expected to pay large dividends in FY22
- Furniture business Nick Scali has expanded its growth potential with the acquisition of Plush
- Charter Hall Long WALE REIT is a leading property business with a high distribution payout ratio and a high occupancy rate
ASX dividend shares may be able to provide attractive cash returns during this period of significant market volatility.
One of the benefits of a market decline, aside from the lower price, is that the dividend yield is also increased for prospective investors.
With that in mind, here are two ASX dividend shares with pretty large expected yields for FY22:
Nick Scali Limited (ASX: NCK)
Nick Scali is one of the largest retailers of furniture in Australia. It has a national network of showrooms showcasing its higher-quality products.
The company has been rated as a buy by the broker Macquarie with a price target of $15.50. Macquarie thinks that Nick Scali will benefit from the acquisition of Plush. In FY22, it's expected to pay a grossed-up dividend yield of 6.3% in FY22 and 7.3% in FY23.
Plush-Think Sofas comes with a network of 46 showrooms across Australia. Management said that this acquisition adds an exciting new chapter in the company's growth. Plush is making more than $120 million in sales revenue and it has achieved "good" profit margins which will be enhanced.
Supply chain costs will be brought down in Plush as Nick Scali brings its logistics in-house. It's planning to double the number of Plush stores in the long-term across Australia and New Zealand.
Management is expecting that the overall online channel will continue to grow as it develops further capabilities.
In the first quarter of FY22, the ASX dividend share's sales revenue was in line with the previous year, with the "margin" being in line with the previous year too despite shipping delays and lockdowns in countries that it sources from.
Charter Hall Long WALE REIT (ASX: CLW)
This is a diversified real estate investment trust (REIT) that owns a very diverse array of property across Australia such as government buildings, telco buildings, long weighted average lease expiry (WALE) retail properties and so on.
It's currently rated as a buy by the broker Macquarie with a price target of $5.31. That's almost 10% higher than where it is right now.
Based on Macquarie's numbers, the ASX dividend share is expected to pay a yield of 6.2% in FY22.
The REIT is steadily making more acquisitions, to improve the strength and diversity of its portfolio and rental income. One of the recent deals was buying Ale Property.
Charter Hall Long WALE REIT has rental income growth built into its contracts, giving it organic income growth potential.
For the three months to December 2021, the REIT had its portfolio revalued, which led to an 8.1% increase on prior book values. This helped grow the pro forma net tangible assets (NTA) per unit by 14.4% to $5.85.
In FY22, it's expecting operating earnings per security (EPS) to grow by at least 4.5%. It now has a WALE of around 13 years.
