Owners of ANZ Group Holdings Ltd (ASX: ANZ) shares have been getting large dividends for a long time. There's another ASX dividend giant I'd much rather buy for a large dividend yield. That pick is Charter Hall Long WALE REIT (ASX: CLW).
This real estate investment trust (REIT) owns a variety of different properties which are all on long-term leases, with a very high proportion of tenants being blue-chip tenants. In my view, that means it has a high level of income stability.
There are three things I'm going to talk about.
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Strong yield
Both of these businesses have a very strong dividend yield and are projected to pay an appealing payout in FY24.
Charter Hall Long WALE REIT is expecting to pay an annual payout of 26 cents per unit which is a distribution yield of 6.9% for FY24.
In FY24, the projection on Commsec suggests owners of ANZ shares may get an annual dividend per share of $1.62, which would represent a sizeable cut compared to FY23. This payout would translate into a fully franked dividend yield of 5.9%.
Diversification
The ASX dividend giant has a diversified property portfolio across a number of sectors including telecommunication exchanges, logistics, manufacturing, service stations, Bunnings properties and several more.
I like the diversification offered by the REIT because it's not overly exposed to any particular type of property.
ANZ on the other hand makes most of its profit from lending to borrowers from Australia and New Zealand. To me, that's not much earnings diversification at all.
Better long-term outlook?
ANZ is facing a lot of competition from ASX bank shares and unlisted lenders. Due to this, its net interest margin (NIM) is being challenged, thus hurting its profitability. I don't think those competitors are going anywhere – it's not as though they're suddenly going to give up and let ANZ make all of the profit.
The ASX dividend property giant has an appealing rental income outlook in my opinion. Its portfolio has 51% of leases linked to CPI – the known CPI reviews for the 2024 financial year will average 5.5%. When combined with the 3.1% fixed rental increases across the balance of the portfolio, the FY24 weighted average rent review is expected to be 4.3%.
I like that the REIT had a weighted average lease expiry (WALE) of 11 years at 30 September 2023, which means a lot of future rental income is already baked in.
In a falling interest rate environment, I think the Charter Hall Long WALE REIT's property valuations and share price can benefit.
