The ASX dividend stock space looks very attractive to me right now as an income investor. I've got my eyes on a few businesses that look very appealing.
Businesses that deliver passive income and could benefit from the Reserve Bank of Australia's (RBA) cash rate cuts could be excellent choices right now.
The ASX share market has risen in the last few months, resulting in there being fewer good value opportunities out there. In saying that, below are two ASX dividend stocks I believe could outperform the S&P/ASX 200 Index (ASX: XJO) over the next few years.
HomeCo Daily Needs REIT (ASX: HDN)
This business is a real estate investment trust (REIT) that invests in convenience-based assets across the subsectors of neighbourhood retail, large format retail, and health and services. It aims to provide investors with consistent and growing distributions and is focused on the growth corridors of Sydney, Melbourne, Brisbane, Perth, and Adelaide.
The ASX dividend stock is maximising its rental income from the portfolio, with an occupancy rate of more than 99%. The business is also delivering a solid level of rental profit growth. In the FY25 half-year result, it reported a 4% growth in net operating income (NOI). This can help the business deliver rising distributions for investors.
It's expecting to grow its FY25 distribution per unit by 2.4% to 8.5 cents, which translates into a distribution yield of 6.5%.
In the HY25 report, it revealed a net tangible asset (NTA) of $1.45 per unit, so it's trading at an appealing 10% discount to its underlying value.
I believe that the RBA cuts this year (and potential future ones) will help increase the value of the properties and reduce the interest costs.
Scentre Group (ASX: SCG)
The other ASX dividend stock I'll mention is Scentre, which owns 42 Westfield shopping centres in Australia and New Zealand.
It's delivering strong rental income, thanks to its portfolio occupancy of 99.6% as of 31 March 2025.
Despite the economic conditions, Scentre continues to experience growing visitor numbers. In the 18 weeks to 4 May 2025, customer visitations came to 179 million, up 2.3% year over year. Its tenants achieved $6.7 billion of sales in the three months to 31 March 2025, up 2.8% year over year.
Westfield Warringah was recently declared a state significant development, with the potential to create up to 1,500 dwellings. It's looking to secure similar opportunities across many of its other destinations.
The business is expecting to grow its funds from operations (FFO) – net rental profit – per unit by 4.3% in FY25 to 22.75 cents. This is expected to help fund a 2.5% increase in the distribution to 17.63 cents per security. We can see the company is retaining some of its rental profit to invest back into the business for more growth, which I think is appealing.
At the current valuation, the ASX dividend stock is projecting a distribution yield of 4.8%. If it paid out all of its FFO, the yield would be 6.2%.
