The ASX dividend share space has seen a lot of volatility in the last year, amid significant changes surrounding tariffs, inflation and interest rates.
A higher interest rate is a significant headwind for the valuations and profitability of certain businesses due to how it could impact demand for their products and services, and/or increase the cost of debt.
Let's look at two businesses I believe are significantly undervalued on a long-term basis, while their current dividend yields are very attractive.
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Dexus Industria REIT (ASX: DXI)
This business is a real estate investment trust (REIT) that is largely invested in high-quality industrial warehouses across major Australian cities, providing sustainable income and capital growth.
Rental income is incredibly consistent and enables reliable distributions. In FY26, it expects to generate funds from operations (FFO) – net rental profit – of 17.4 cents per security. This is expected to fund an annual distribution per unit of 16.6 cents, which translates into a distribution yield of around 7%.
The business notes that underlying supply-demand fundamentals are solid, with low vacancy rates across core industrial markets, with high land and construction costs putting pressure on pipelines. In the medium-to-long-term, the sector is expected to be supported by a growing population and limited available supply.
In terms of the valuation, the ASX dividend share reported a net tangible asset (NTA) per security of $3.39 as at 31 December 2025. At the time of writing, it's trading at a discount of around 30% to this figure.
Nick Scali Ltd (ASX: NCK)
The other ASX dividend share I want to highlight is Nick Scali, a furniture retailer.
The business operates Nick Scali in both Australia and the UK. It also sells furniture through the Plush brand in Australia after recently acquiring it.
Time will tell how much the recent changes to the economic environment impact the furniture retailer, but I'm optimistic the company can perform once conditions improve again.
But, the current Nick Scali share price looks too good (and low) to ignore because the economic backdrop won't always be like this.
For starters, the company's FY26 half-year result was very pleasing – ANZ revenue grew 13.1% to $251.7 million and ANZ net profit rose 29.4% to $46 million. Overall revenue (including the UK) rose 7.2% to $269.3 million and net profit grew 23.1% to $41 million. This allowed the business to hike its interim dividend per share by 30% to 39 cents.
One of the most exciting parts of the result was that the UK's gross profit margin improved by 14.1 percentage points, going from 45.1% to 59.2%. I think this bodes well for future profitability in the UK as it opens more stores there. The projection on CMC Invest suggests the business could pay an annual dividend per share of 72 cents in FY26, which translates into a grossed-up dividend yield of 7.1%, including franking credits, at the time of writing. The forecast currently also suggests the business could increase its annual dividend per share in FY27 and FY28.
