Why this ASX share is a retiree's dream for FY27

This business offers a number of positives for retiree investors.

The ASX share Charter Hall Long WALE REIT (ASX: CLW) looks to me like a top pick for retirees and anyone wanting passive income.

Commercial property typically offers a much higher rental yield than residential property, allowing it to provide investors with attractive passive income.

Real estate investment trusts (REITs) are the structure that allows investors to invest in commercial property on the ASX.

For me, Charter Hall Long WALE REIT is one of the leading picks for retirees for a number of reasons.

Elderly couple using laptop at home while drinking a cup of coffee.

Image source: Getty Images

Diversification

The business can offer investors significant diversification because it's invested across a number of key defensive tenant industries that are supposedly resilient to economic shocks.

It's invested in areas that have tenants across government areas (like Geosciences Australia), hotels, grocery and distribution, telecommunications exchanges, data centres, service stations, banking and professional services, food manufacturing, healthcare, Bunnings properties, and more.

To be able to make one investment and get exposure to all of those sectors sounds appealing to me.

In terms of the quality of tenants, the organisations that account for at least 5% of revenue include government entities, Endeavour Group Ltd (ASX: EDV), Telstra Group Ltd (ASX: TLS), BP, Coles Group Ltd (ASX: COL) and Metcash Ltd (ASX: MTS).

The tenants are signed on for long-term contracts, giving investors long-term income security. Charter Hall Long WALE REIT currently has a weighted average lease expiry (WALE) of around nine years, which is a comforting length of time for retirees.

Ongoing rental growth

A REIT is not a term deposit; it's capable of delivering growth for investors.

The business has rental growth built into its contracts, which is a good tailwind for both rising property values and increasing the distribution over time.

Some of the properties have rental income growth linked to inflation, while the rest have fixed annual increases. This combination helped the business achieve average annual net property income growth of 3.1% in FY26.

I think rising rental income is a key factor that helped the business report a 2.6% year-over-year improvement in net tangible assets (NTA) during FY26.

Strong passive income yield

The business has a very generous distribution payout ratio of 100% of its rental earnings, giving investors a large yield.

It's also trading at a large discount to its underlying value – the NTA was $4.71 as of 30 June 2026. That means it's trading at a 28% discount, which is enormous for a high-quality REIT, in my view.

The ASX share expects to pay an annual distribution of 25.5 cents per security in FY27, which translates into a distribution yield of 7.5%. I think that's very appealing, and I'd happily buy some units if I were a retiree.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended BP. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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