ASX dividend shares can be cheap and provide a good dividend yield — if we look in the right places.

Some industries have been more impacted by high interest rates than others. Sometimes, amid that pain, there can be undervalued opportunities, and I believe several real estate investment trusts (REITs) are trading too cheaply. Especially considering an RBA interest rate cut could be just around the corner.

With that in mind, I think these two stocks are flying under the radar and might just be too cheap to ignore.

HomeCo Daily Needs REIT (ASX: HDN)

This REIT invests in subsectors like neighbourhood retail, large-format retail, and health and services.

It's also invested in an unlisted fund called Last Mile Logistics, which targets "core plus transition assets with upside via repositioning into essential last-mile real estate infrastructure." In other words, its tenants are important providers of various daily needs for Aussies.

The ASX dividend share has a strong rental portfolio, with an occupancy rate of more than 99%. It generated 4% comparable property net operating income in FY24 and expects to report funds from operations (FFO) – net rental profit – of 8.8 cents per security in FY25, up 2.3% year over year.

The ASX dividend share also expects to grow its distribution by 2.4% in FY25 to 8.5 cents per security. This translates into a forward distribution yield of 7.4% at the current HomeCo Daily Needs REIT share price of $1.15.

The HomeCo REIT reported its net tangible assets (NTA) at $1.44 per unit on 30 June 2024, so it's trading at a 20% discount to this.  

Abacus Storage King (ASX: ASK)

Abacus describes itself as a fully integrated owner, operator and manager of a self-storage 'operating platform'. At 30 June 2024, it had 123 assets with 647,050 sqm of space worth $2.88 billion. At the end of FY24, it had 36 locations in New South Wales, 25 in Victoria and 23 in Queensland.

The ASX dividend share is benefiting from several trends, including increasing housing density, population growth, and the rise of e-commerce. These are helping support demand, assisting the occupancy rate and the rental rate it can charge.

In its 'established portfolio', which had an average occupancy of 91% in the first quarter of FY25, the average rent per sqm increased 4.5% year over year. It's also boosting its operating profits by making acquisitions, with the fragmented sector providing ample opportunities, according to the company.

I think this Abacus Storage King is an effective investment target that will allow you to gain exposure to the increasing value of land in major Australian cities over time.

The company expects to pay an FY25 distribution of 6.2 cents per security, which translates into a forward distribution yield of 5.5% at the current Abacus Storage King share price of $1.13, following a 15% decline since 24 September 2024.