ASX dividend shares are looking attractive in this uncertain environment, in my opinion.
Inflation and higher interest rates have hurt some valuations and certainly increased volatility.
But when share prices go down, not only does it make a business cheaper, it also means the dividend yield is pushed higher for new investors.
It's possible that some ASX dividend shares may be able to provide investors with a more resilient profit performance, such as the two below.
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Metcash Limited (ASX: MTS)
Metcash is a diversified business with three different pillars – food, liquor, and hardware.
The company's food division is the largest supplier to Australia's independent supermarkets, such as IGA and Foodland. We all need food so I think this division has particularly defensive earnings.
As well, its liquor division supplies around 90% of independent liquor stores, including IGA Liquor, Bottle-O, Cellarbrations, and Porters Liquor.
The ASX dividend share's hardware division owns brands like Mitre 10, Total Tools, and Home Timber & Hardware. The company's combined hardware network has more than 700 locations.
In terms of its dividend, the company's dividend payout ratio is 70% of its underlying net profit after tax (NPAT). This represents a solid trailing grossed-up dividend yield of 7.8%.
There could be more growth in FY23, considering how promising Metcash's recent trading update was. For the 23 weeks to 9 October, group sales were 7.7% higher year over year, with hardware sales 17.1% higher.
Charter Hall Long WALE REIT (ASX: CLW)
This is one of the larger real estate investment trusts (REITs) on the ASX. It owns a diversified portfolio across a number of different sectors, but all its properties have long lease expiries, giving the ASX dividend share considerable rental income visibility. In fact, the REIT has a weighted average lease expiry (WALE) of 12 years.
It's invested in properties across industrial, logistics, office, social infrastructure, agri-logistics, and retail. The business reports that it has blue-chip tenants, with 99% being government, ASX-listed companies, and national or multinational organisations.
At present, some of its largest tenants include the Australian government, Telstra Corporation Ltd (ASX: TLS), BP, and Endeavour Group Ltd (ASX: EDV).
Other ASX tenants include Coles Group Ltd (ASX: COL), Inghams Group Ltd (ASX: ING), Metcash, and Myer Holdings Ltd (ASX: MYR).
In FY23, the ASX dividend share expects to generate 28 cents of operating earnings per share (EPS) and pay it all out as a distribution. At the current Charter Hall Long WALE REIT share price, it has an expected distribution yield of almost 7%.
