3 ASX real estate investment trusts paying a dividend yield of more than 7%

Real estate investment trusts can be a good investment if you’re looking for stability and predictable income streams, but that’s not to say they’re without risk.

Two of the trusts I’m looking at today suffered major shocks over the past year, but they’ve had some good news over the past week, which has shored up investor confidence.

Let’s look at how they’re expected to perform on the dividend front going forward.

HealthCo Healthcare and Wellness REIT (ASX: HCW)

This real estate trust was caught up in the failure of private hospital operator Healthscope, which went into receivership in May, casting doubts over the income streams from hospitals owned by the trust.

The good news is that the Healthscope hospitals were able to continue operating, albeit split up among several new owners.

Healthco announced just this week that binding agreements had been finalised for the 10 final Healthscope hospitals owned by itself and the associated Unlisted Healthcare Fund, which led the company to reinstate its dividend payments.

Healthco is aiming to pay 6 cents per share in dividends over the full year, which equates to an 8% dividend yield at the share price of 74.75 cents at the time of writing.

Macquarie predicts this strong dividend stream will continue through FY29, when it will be 8.7%, and the broker also has a price target of $1.10 on Healthco shares, up from 88 cents as a result of the Healthscope resolution.

The broker said the company is trading at a steep discount to its $1.35 net tangible asset backing.

Arena REIT (ASX: ARF)

Arena also had some hiccups over the past year, with childcare operator Edge Early Learning Centre placed in administration, casting doubt on lease payments from that portfolio.

Arena said this week that the administrator of Edge had entered into an agreement with Goodstart Early Learning for the acquisition of 31 early learning centre businesses operated by Edge.

The proposed transaction includes services at 20 of the 27 centres owned by Arena and occupied by Edge, and Arena said it was still being paid rent for all 27 centres.

Arena shares have added almost 25% over the week to be changing hands for $2.48 at the time of writing.

Arena has previously guided to dividends per share of not less than 18 cents for FY27, which would constitute a dividend yield of 7.3%.

Centuria Office REIT (ASX: COF)

Centuria is forecasting dividends of 9 cents per share in FY27, which, at the time of writing, equates to a dividend yield of 10.8%.

The company’s portfolio includes 18 assets worth $1.8 billion, which had 91% occupancy last year.

COF Fund Manager Belinda Cheung said recently the focus for the current year would be on “maintaining high portfolio occupancy, improving portfolio weighted average lease expiry by addressing near-to medium-term expiries while curating a quality portfolio of modern, sustainable office assets”.  

The post 3 ASX real estate investment trusts paying a dividend yield of more than 7% appeared first on The Motley Fool Australia.

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