Dexus: A High-Yield ASX Opportunity Backed by Strategic Capital Recycling

DXS emerge to be a top dividend-paying ASX stock, led by strong capital allocation and financial performance.

Dexus (ASX: DXS)

Dexus (ASX: DXS) is one of the top dividend-paying stocks in the ASX, despite weak price momentum, with an unfranked annual dividend yield of 6.17% and a market capitalisation of $6.43B.

DXS announced on 3 August 2026, stating that it has exchange contracts for the sale of three wholly owned office properties for a combined gross sale of $715M, exceeding its announced target of circa $715M of divestment by the end of FY27. The properties include two properties in Sydney and one in Brisbane. The sale was in line with a combined independent valuation as at June 2026 or reflected a circa 4% discount to combined book values at 31 December 2025.

The settlement is expected to occur in October 2026, subject to certain precedent, including FIRB approval. At settlement, circa 67% of the sale price will be received, with the remaining circa 33% balance deferred for 30 months and subject to an annual coupon of 6.25%.

These sale proceeds on settlement would reduce Dexus’s pro forma look-through gearing³ by circa 2 percentage points.
Financial performance

DUX had announced on 18 February 2026 its half-yearly of FY26 for the period ending in December 2025, stating its FUM has reached $51.5B, of which $15.3B is from the investment portfolio and $36.2B is from third-party FUM, making third-party FUM 2.4x of the investment portfolio. The company has delivered a strong performance meeting the expectations, as DUX reported adjusted funds from operations (AFFO) of $253.3M and funds from operations of $352.2M (+4.3% YoY). The company also reported statutory net profit after tax of $348.5M, while distributions reached 19.3 cents per security.

Segment-wise, industrial property FFO increased by 9.7% YoY to $70.1M, co-investments in pooled funds increased by 2% YoY to $35.2M, and office property FFO reached $256.3M. The company has reported a distribution payout of 82% and AFFO per security of 23.6 cents.

The company demonstrated a solid operational performance with total office lease volume almost double compared to HY25 at 95,300 sqm of leases by area. The industrial LFL income growth increased by 8.7% YoY, and rent collection reached 99.7%. The company has reported a positive valuation uplift reaching $122.2M, and NTA increased to $8.95.

DXS delivered a strong performance on the financial part as well, with adjusted operating cash flow of $321.4M and a cash surplus of $45.7M after paying the distribution of $207.6M, highlighting strong cash generation. The balance sheet remained strong with $2.5B of liquidity and $4.5B of total debt, with 95% of debt hedged at an average cost of 4.7% and an interest cover of 3.7x, providing financial flexibility to the company.

Conclusion

The company has demonstrated a disciplined capital recycling strategy by divesting office assets while delivering strong results supported by positive portfolio revaluation, industry fundamentals and stable cash flow generation. This combination of a strong balance sheet and growing funds management makes the company ideal for long-term value creation.

(Source: Company Announcements)