The ASX dividend stalwart Centuria Industrial REIT (ASX: CIP) is a business that should be on every passive income investor's watchlist. It's certainly on mine!
As the name suggests, it's a real estate investment trust (REIT), which means it's a business that owns (commercial) property to lease to tenants. It's Australia's largest domestic pure-play industrial REIT, with high-quality industrial assets in key cities across Australia.
It has a quality, diverse tenant base leasing buildings such as distribution centres (42% of the portfolio value), manufacturing and production (24%), transport logistics (14%), data centres (12%), and cold storage (7%).
Let's get into why this is such an appealing ASX dividend stalwart to own for the long term.
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Appealing distribution yield
The business has provided guidance for investors that it's going to increase its 2026 financial year distribution by 3% year over year to 16.8 cents per unit.
That's not the highest payout growth rate on the ASX, but it shows the business can increase its payments to investors, even when interest rates are relatively high.
If it does deliver on that payment, the ASX dividend stalwart can provide investors with a FY26 distribution yield of 5.5%.
The passive income increase will be funded by an increase in the funds from operations (FFO) per unit, which is essentially the net rental profit, of up to 6% to a possible 18.5 cents per unit.
If it does achieve that level of profitability, we're talking about a distribution payout ratio of roughly 91%. That's rewarding for shareholders while also retaining some of the net rental profit to invest in the business for stronger growth longer term.
Additionally, it's useful to note that the business partially has such a sizeable distribution yield because it's trading at a large discount to its underlying asset value. At 31 December 2025, its net asset value (NAV) was $3.95 – it's priced at a 23% discount to this right now.
The ASX dividend stalwart has growth tailwinds
I'm expecting significant rental growth from the business in the coming years, which is one of the main reasons why I'm calling this an attractive ASX dividend stalwart.
According to the REIT, its portfolio is approximately 20% 'under-rented'. This means that the current rent is significantly less than the market rent. As contracts come up for renewal, this will help boost the rental income.
The business is expecting net operating income (NOI) growth of 5% per year over the medium term, which is a strong tailwind for future distribution payouts. I doubt many REITs will grow their NOI at a faster pace than that organically.
It also has a development pipeline of around $250 million for the next two years, which should be a useful boost for rental earnings.
Actual demand for industrial space continues to grow thanks to a rising population, increasing e-commerce adoption, limited supply of warehouses, rising demand for cold storage for fresh food and pharmaceuticals, growing numbers of data centres, and the onshoring of supply chains.
Overall, the outlook seems very positive for long-term rental and distribution growth.
