Buy this ASX real estate trust for long-term dividends above 6%

When it comes to stability, real estate investment trusts can be a good place to look among the various ASX sectors.

One such trust that has released its results recently is the Charter Hall Retail REIT (ASX: CQR), which, as the name suggests, invests in a portfolio of retail assets.

Another solid year

The trust said in a statement to the ASX in early August that its full-year operating earnings had come in at $153.4 million, up 4% on FY25.

The trust paid dividends of 25.5 cents per share, up 3.3% on the previous year, and its net tangible assets stood at $5.03 per unit.

In terms of operating highlights, the trust said it was progressing towards its target of investing in 50% convenience retail shopping centres and 50% convenience net lease retail assets.

The trust's portfolio occupancy sat at 99.1% at the end of the year.

Charter Hall Retail's Chief Executive Officer, Ben Ellis, said:

FY26 was a milestone year as we completed the transition towards our target 50% allocation to Convenience Net Lease Retail assets. Over the past six years, the REIT has diversified its income base through the addition of high-quality tenant covenants and a series of accretive investments. This portfolio evolution has increased exposure to capital-efficient assets supported by strong underlying land values and predominantly inflation-linked rental growth. These investments delivered $317 million in value creation while enhancing the REIT's long-term earnings growth profile.

Mr Ellis said the shopping centre portfolio continued to perform strongly, "with specialty tenant retention increased to a record 86%, as many of our trade areas continue to benefit from historically low levels of new retail supply''.

He added:

With development activity constrained by elevated construction costs, we expect existing convenience retail assets to benefit from improved productivity and resilient rental growth, supporting long-term value creation for CQR investors.

CQR provided guidance for FY27 for operating earnings to grow by no less than 3.5% and dividends to grow by 3.5% to 26.4 cents per share.

Brokers keen on steady dividend outlook

UBS has a buy rating on CQR shares, with a price target of $4.65, compared with the current price of $4.15.

The broker said the trust's dividend guidance beat expectations by 2% while earnings guidance was in line.

UBS is forecasting a dividend yield of 6.2% in FY27, increasing to 7.1% by FY30.

Macquarie, meanwhile, has a neutral rating on the stock and a price target of $4.18.

The broker said it was attracted to the trust's growth outlook and yield, "however, we downgrade our recommendation on valuation grounds with the share price approaching a 2-year high''.

Macquarie is forecasting a yield of 6.3% this year, increasing to 6.8% by FY29.

The post Buy this ASX real estate trust for long-term dividends above 6% appeared first on The Motley Fool Australia.

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 positions in and has recommended Charter Hall Retail REIT. 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.

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