There are some ASX dividend shares that offer shareholders dividend yields of more than 4%.
Some businesses may have higher dividend yields, but the two businesses in this article have yields that may be both sustainable but also leave room for growth over time.
The below two ideas both have much higher yields than what can be found from a typical bank account:
Centuria Industrial REIT (ASX: CIP)
Centuria Industrial is a real estate investment trust (REIT). It is the largest Australian pure-play industrial REIT.
At the end of 31 December 2021, it had total assets of $3.9 billion spread across 80 properties, with net tangible assets (NTA) per unit of $4.21. The portfolio has a weighted average lease expiry (WALE) with a 99.2% portfolio occupancy. This gives the portfolio a high level of income visibility and security.
The ASX dividend share has been looking to increase its exposure to urban infill industrial markets that cater to last-mile e-commerce operators.
Centuria says that tenant demand is very strong thanks to customer shifts to e-commerce plus onshoring to maintain supply chain resilience, and with limited supply within urban infill markets. It’s expecting industrial rents to continue to rise.
It’s now expecting to generate FY22 funds from operations (FFO) guidance of no less than 18.2 cents per unit and re-iterates distribution guidance of 17.3 cents per unit. That represents a distribution yield of 4.6%.
It’s currently rated as a buy by the broker Ord Minnett with a price target of $4.30. The broker has pencilled in an estimated yield of 4.9% in FY23.
Coles Group Ltd (ASX: COL)
Coles is one of the largest supermarket operators in Australia, with only Woolworths Group Ltd (ASX: WOW) as the major competition.
It has seen its share price fall by approximately 7.5% since the start of 2022, which has had the benefit of increasing the possible dividend yield for prospective investors.
Coles is currently rated as a buy by the broker Citi. The estimated grossed-up dividend yield for FY22 is 5.5% and for FY23 it’s 6.2%.
The ASX dividend share will soon be telling investors how it performed for the first six months of FY22. Investors have already had a bit of a look into the performance with the first quarter of FY22.
In the 13 weeks to 26 September 2021, total sales were up 1.5% to $9.76 billion. Supermarket sales were up 1.8% to $8.62 billion. The other Coles divisions are liquor (which includes Liquorland) and Express.
That growth was achieved despite a high level of COVID-induced buying by customers in the first quarter of FY21. Over two years, the total Coles sales were up 12.2%.
Online sales continue to help drive the revenue higher. Supermarket e-commerce sales increased 48% in the first quarter, with sales penetration of 9%. Liquor sales rose 72% and had a sales penetration of 4.5%.
It’s not just sales that are helping grow the bottom line. Coles said that it’s on track to deliver ‘smarter selling’ benefits of more than $200 million in FY22. The company has invested in key efficiency and customer service transformation initiatives including the rollout of customer packing benches and trolley-assisted checkouts.
Coles was optimistic with the end of COVID restrictions, high household savings and launches of new product ranges.
Citi’s earnings estimates suggest the Coles share price is valued at 21x FY22’s estimated earnings.
The post 2 ASX dividend shares with yields above 4% appeared first on The Motley Fool Australia.
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More reading
- Why UBS is warning of more pain for the Coles (ASX:COL) share price
- Why is the Woolworths (ASX:WOW) share price trailing Coles by 5% over the past month?
- 2 ASX dividend shares with big yields to buy
- Could this be the biggest issue faced by ASX retail shares heading into earnings season?
- 2 buy-rated ASX dividend shares with attractive fully franked yields
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 no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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