The ASX stock Charter Hall Long WALE REIT (ASX: CLW) could be one of the most underrated businesses on the market right now with a big dividend yield, in my view.
This real estate investment trust (REIT) is not like the others on the ASX. It's invested across a wide range of real estate sectors including government-related (such as Geosciences Australia), hotels, grocery and distribution, telecommunications and data centres, service stations, banking and professional services, food manufacturing, healthcare and so on.
No other ASX REIT gives investors that same level of diversification across many areas.
So, I like to think of this as a broad investment across the commercial property sector – it's not just about one area.
With that in mind, I'd say there are three excellent benefits to owning this REIT.
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Excellent passive income
The business is able to offer investors a high dividend yield in part because of its 100% payout ratio. That means it's maximising passive income for investors by paying out all rental profit each year.
In FY27, the business expects to deliver operating earnings per security (EPS) and a distribution per security of 25.5 cents – the same as FY26.
That means the distribution yield for FY27 is expected to be 7.1%. Considering that the dividend yield comes from a portfolio of high-quality commercial properties, it's a compelling yield and noticeably superior to what's on offer from term deposits.
By maintaining its payout in FY27 – despite multiple interest rate rises – I think the business has shown it can be a reliable choice for passive income.
Long-term rental agreements
Another key feature that makes this ASX stock stand out from the crowd of REITs is its long weighted average lease expiry (WALE).
In other words, its portfolio of real estate has, on average, locked in tenants for the long-term. When the business announced its FY26 result, it revealed it had a 9.2-year WALE, providing long-term income security.
It also said that it has a 99% occupancy rate, with 99% leased to blue-chip tenants across 505 properties.
Pleasingly, those properties also have a mix of contracted rental growth included in their contracts. Rent is organically increasing either with fixed annual increases or the rises are linked to inflation. The business reported 3.1% average annual net property income growth in FY26 – a solid rise for a diversified business like this.
Significantly undervalued
I think it's a good idea to look at the net tangible assets (NTA) of a property business because that tells us how much the business is worth on an underlying basis, including the value of the properties, the loans, cash and so on.
Charter Hall Long WALE REIT reported NTA of $4.71 as at 30 June 2026. That means it's trading at a 24% discount to this value. This discount is a key reason why the dividend yield is so large.
The entire property portfolio was independently valued during the year, resulting in a 3.2% increase (or $188 million). If we went out and tried to buy those properties, we'd have to pay the full price, rather than being able to invest in this REIT at a discount of more than 20%.
