The ASX dividend share Charter Hall Long WALE REIT (ASX: CLW) is a great one to consider for most of the retiree community (and other investors wanting passive income).
I think the real estate investment trust (REIT) sector is a good one to consider amid rising interest rates because of the better value and distribution yield on offer.
Rather than having to go and individually buy all of these commercial properties, an REIT enables investors to buy a small slice of a property portfolio in a single investment.
Image source: Getty Images
Diversified portfolio
The REIT is invested in more than 500 properties across several key defensive industries that are more resilient to economic shocks than other areas.
It's invested in sectors like government-tenanted properties (such as the Australian Border Force, Geosciences Australia and Department of Defence), pubs and hotels, grocery and distribution, data centres, telecommunication exchanges, service stations, food manufacturing, waste and recycling management, Bunnings properties and so on.
This property portfolio is spread across Australia, including NSW, Victoria, Queensland, WA, ACT, South Australia, Northern Territory and Tasmania. It also has a small exposure to New Zealand.
The one thing that all of these properties have in common is that the Charter Hall Long WALE REIT aims to have them signed on for long-term leases.
The REIT's WALE is currently around nine years, which means a lot of rental income is already contracted from high-quality tenants like the Australian government, Endeavour Group Ltd (ASX: EDV), Telstra Group Ltd (ASX: TLS), BP, Coles Group Ltd (ASX: COL) and Metcash Ltd (ASX: MTS).
The ASX dividend share's yield
I'm sure many retirees and passive income investors want to know about the distribution yield on offer, so let's look at that.
The business is expecting to grow its FY26 annual distribution by 2% to 25.5 cents per unit, which translates into a forward distribution yield of 7.3%.
That yield is based on an expected distribution payout ratio of 100% of its operating rental earnings.
Why is the yield so high? It's because the business is trading at 26% discount to its net tangible assets (NTA) at 31 December 2025.
It's delivering underlying growth
It's important to remember not to invest in something just because of the yield. I believe there should be underlying growth, otherwise there's a high risk of the valuation (and passive income payment) going backwards over the longer-term.
Some of the ASX dividend share's property portfolio has fixed annual rental increases, while the rest has increases linked to inflation. This helped the FY26 half-year net property income (NPI) increase by 3% on a like-for-like. That's not a lot of growth, but it's positive and makes me comfortable to invest in a high-yielding business like this.
