I believe there are some high-quality ASX dividend shares that can provide solid income for the long-term at the current prices.
It’s a different investment landscape compared to the start of 2022. Many asset values have been pushed lower. But, I think this is a good thing for dividend investing because it means the potential starting dividend yield is higher.
With that in mind, I’d happily buy these two for long-term income:
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
WHSP is an investment business. Its job is to invest in other businesses and assets. The ASX dividend share is invested in ASX shares like TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG) and Pengana Capital Ltd (ASX: PCG). It also has a growing private business portfolio.
It has increased its annual dividend every year for more than two decades in a row. That’s excellent stability and could be very useful during times like this and the COVID pandemic.
The dividend is funded by WHSP’s growing cashflow, which is generated by dividends and other income from its portfolio. The ASX dividend share only pays out part of its cashflow each year, it retains the rest to invest in more opportunities.
At the current WHSP share price it has a dividend yield of 3.5% including franking credits. That’s a solid starting yield in my opinion.
Centuria Industrial REIT (ASX: CIP)
This is a real estate investment trust (REIT) – it owns a portfolio of industrial properties. I think that industrial properties have a more optimistic future than other sectors like retail or office.
Distribution warehouses are becoming increasingly important in a digitalising world due to e-commerce and logistics. However, office buildings face the headwinds of work-from-home and tenants downsizing. It could be tricky for retail due to the rise of online shopping.
The ASX dividend share has seen its share price fall 26% since the beginning of the year. I think the decline makes up for the higher interest rate situation. The potential rental growth could help rental profit in the coming years and it has a weighted average lease expiry (WALE) of 8.3 years.
In FY23, Centuria Industrial REIT is expecting to generate $0.17 of funds from operations (FFO) – that’s the net rental profit – and pay a distribution of $0.16 per unit. That means it’s valued at 18x its net rental profit. The FY23 distribution yield is projected to be 5.2%. I think that’s a solid starting yield.
