There are a few ASX shares out there that are offering investors very high dividend yields. Dividends, or distributions, are not the only part of returns we should worry about, of course – capital growth is essential too.
I wouldn't invest in a high-yield ASX share unless I believe its underlying value is attractive; otherwise, any income payments may be offset by capital declines.
Sometimes, businesses with very high yields may be at a higher risk of a dividend cut than a typical dividend-paying business. But, at the current valuations, I believe the following businesses are underrated by the market and have given guidance of large payouts for FY26.
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Centuria Office REIT (ASX: COF)
The office sector has faced challenges over the last few years, but several companies have implemented mandates requiring employees to partially or fully return to the office. This, along with a wider economic recovery, is a tailwind for the sector.
This real estate investment trust (REIT) reported that 75% of its income came from government, multinational corporations, and listed entities, which are high-quality and reliable tenants. At the end of FY25, the business had a portfolio occupancy of 91.2% and a weighted average lease expiry (WALE) of 4.1 years.
In terms of how undervalued it is, the business had net tangible assets (NTA) of $1.67 per unit in FY25, meaning it's trading at a discount of approximately 30%.
The business expects to pay a distribution per unit of 10.1 cents in FY26, which will be funded by rental profit (funds from operations – FFO) of between 11.1 cents and 11.5 cents per unit. At the time of writing, the ASX share's FY26 dividend yield is approximately 8.5%.
At the time of the FY25 result, the fund manager of the REIT, Belinda Cheung, said:
Looking ahead, higher replacement costs and office withdrawals for alternate-use conversion is expected to stem future supply and reduce the market size to rebalance office markets, reducing future vacancy rates. COF's portfolio is well positioned to benefit from these future tailwinds.
Abacus Group (ASX: ABG)
Abacus is another business in the property sector. It says it's a strong asset-backed business, with an annuity-style model where capital is directed towards assets that provide potential for enhanced income growth and ultimately create value.
It has assets spread across office, retail, and self-storage. The business also generates management fees from self-storage and commercial. It manages and owns almost a fifth of Abacus Storage King (ASX: ASK).
The ASX share is focused on increasing opportunities to scale its investment management activities, including capital partnering and joint ventures.
The business expects to pay a distribution of 8.5 cents per security in FY26, translating into a forward dividend yield of 7.2% at the time of writing.
As a bonus, past and future rate cuts could increase the valuation of the properties in the portfolio and also help improve the earnings, leading to potentially larger distributions.
