The ASX dividend stock Charter Hall Long WALE REIT (ASX: CLW) has fallen steeply – it's down 35% since April 2022 and 22% in the past year. I think this is a great time to look at the real estate investment trust (REIT) at such a cheap price.
This business has several positives, and I think this period of higher interest rates has created an excellent buying opportunity for brave investors.
It's invested in a number of areas including service stations, telecommunication exchanges, data centres, government-related buildings (such as Geosciences Australia), hotels/pubs and so on.
When share prices fall, investors get the chance to buy at a better yield. That's exactly what's happening here. So, let's run through why it's an appealing buy.
Image source: Getty Images
Strong dividend yield
One of the most pleasing elements of this business is how it operates with a distribution payout ratio of 100% of its net rental earnings, unlocking a very strong distribution yield for investors.
However, REITs typically have sizeable amounts of debt on their balance sheets as a way to partially fund their commercial property investments. So, it'd be understandable if some names in the sector face lower rental earnings and a lower distribution in FY27.
But, thanks to the resilience of the ASX dividend stock's operations and compelling rental contract agreements, the business has guided that it will be able to maintain its FY27 annual payout at 25.5 cents per security.
That means the business could pay a distribution yield of 7.25% in FY27.
Pleasing rental growth
One of the reasons why the business has been able to maintain its dividend payout is because it has pleasing rental growth built into its contracts with tenants.
Rental growth is built into the rental contracts, with increases either fixed annually or tied to inflation. With consistent growth, the business can deliver stable, growing payouts over time.
Not only does the business achieve regular rental growth, but its tenants are signed on for a very long time, on average. It currently has a weighted average lease expiry (WALE) of around nine years. That means it can offer investors both long-term income visibility and security.
Very attractive valuation for the ASX dividend stock
Not only is there a good yield, diversification and decent growth on offer, but I think it's also undervalued.
The business reported that on 30 June 2026, its net tangible assets (NTA) was $4.71 per unit, which was a year-over-year increase of 2.6%. The NTA includes the value of the properties, the loans, cash and all the other tangible assets and liabilities.
That $4.71 valuation per unit is based on the entire property portfolio being independently valued during the financial year. At the time of writing, the ASX dividend stock is valued at 25% discount, so I think it's a great time to invest.
I think Charter Hall Long WALE REIT is one of the best value stocks around, though it's not the only one.
