If you’re interested in adding some dividend shares to your portfolio in September, then the two listed below could be great options.
I believe both are well-placed to continue growing their dividends over the coming years despite the tough economic environment. Here’s why I think they are among the best on offer right now:
BWP Trust (ASX: BWP)
BWP is a real estate investment trust (REIT) that invests in and manages commercial assets. These assets are predominantly large format retail properties which are leased to home improvement giant, Bunnings Warehouse. I believe this is a great tenant to have, especially given the strong performance by Bunnings during the pandemic.
While having such a reliance on a single tenant is often a risk, I see it as a strength on this occasion. This is because Bunnings is owned by conglomerate Wesfarmers Ltd (ASX: WES), which also owns a ~23.6% stake in BWP Trust. I believe this means it is very unlikely that you’ll see Bunnings vacating these properties en masse in the future. Overall, I feel this puts BWP in a position to grow its income and distribution at a modest and predictable rate over the next decade. Based on the current BWP share price, I estimate that it offers a forward 4.4% yield.
National Storage REIT (ASX: NSR)
Another option to consider buying is this self storage operator. Due to its strong market position and growth through acquisition strategy, I believe it could prove to be a great long term option. It was thanks partly to this growth through acquisition strategy that National Storage delivered a 9% increase in underlying earnings to $67.7 million in FY 2020 despite the pandemic.
And although management has suggested that its earnings could be flat in FY 2021, I remain confident its growth will resume once the crisis passes. In FY 2021 National Storage expects to post earnings of 7.7 cents to 8.3 cents per share and will then pay out 90% to 100% of this to shareholders. The middle of this range (8 cents earnings per share and a 95% payout ratio) would be a 7.6 cents per share distribution. Based on the current National Storage share price, this represents an attractive 4% yield.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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