The ASX dividend stock Centuria Capital Group (ASX: CNI) has fallen more than 50% from its peak a few years ago. I think this could be a great time to invest in the business.
It's a property-focused fund manager that has more than $20 billion of assets under management (AUM), as of 31 December 2024. It offers a range of potential investment opportunities including listed and unlisted real estate funds, as well as tax-effective investment bonds.
Some of its most well-known property offerings include Centuria Industrial REIT (ASX: CIP) and Centuria Office REIT (ASX: COF).
I think this is a great time to invest in the ASX dividend stock for a few reasons.
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Solid distribution yield
Let's start by looking at how attractive the passive income could be for investors in the short-term.
For FY25, the ASX dividend stock has estimated its annual distribution could grow by 4% to 10.4 cents per security. At the current Centuria share price, that translates into a distribution yield of 6.2%. This is adequately funded by operating earnings per security (OEPS) growing 2.5% year over year to 12 cents.
I'm not sure how much the distribution can grow in the next few years, but I'm optimistic due to two key factors.
Various growth avenues
The business has a core offering of industrial and office property ownership and management. I think it has a good track record growing in these areas. It continues to win new client money in those areas. For example, it recently announced an institutional partnership with BGO for a $200 million industrial portfolio with the potential to expand.
Centuria also has a number of other alternative real estate offerings which is helping grow AUM.
In the FY20 first half, the ASX dividend stock had alternative AUM of $0.7 billion, which was healthcare-related. Alternative AUM had grown to $4.9 billion in the first half of FY25, with $0.5 billion in data centres, $0.7 billion in agriculture, $1.4 billion in healthcare and $2.3 billion in real estate finance.
Centuria can point to positive growth tailwinds for each of those areas, particularly real estate finance, agriculture and data centres. If these alternative AUM areas can continue growing at a good pace, then the business has a very good outlook.
RBA rate cuts
One of the biggest headwinds for businesses involved in the real estate sector in the last few years has been high interest rates. It has increased how much interest they're paying and reduced/impacted property valuations.
But, I believe the headwinds will turn into tailwinds as RBA rates come down. The RBA official cash rate has already reduced by 50 basis points (0.50%) this year and there are predictions of a few more cuts in the next 12 months.
I'm not going to try to precisely predict how many cuts there will be and how much this could boost the ASX dividend stock (and other businesses in the property sector), but the general direction is looking very helpful for Centuria.
