Certain S&P/ASX 200 Index (ASX: XJO) shares could be pleasing picks for dividend income because of their distribution yields.

At a time when central bank interest rates are starting to come down, it could be a good time to look at property businesses with low valuations and high payouts. The lower interest rates go, the more valuable commercial properties could become.

The two businesses below could provide passive income that's stronger than what we can get from a term deposit while also offering growth potential.

Charter Hall Retail REIT (ASX: CQR)

This real estate investment trust (REIT) says it owns property across Australia for convenience retailers. It currently owns shopping centres, service stations, and hotels/pubs.

Its major tenants include Woolworths Group Ltd (ASX: WOW), BP, Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES), Ampol Ltd (ASX: ALD), Endeavour Group Ltd (ASX: EDV), and Aldi. These are strong tenants to have.

I like the diversification efforts by the ASX 200 share in recent years, reducing its reliance on shopping centres. E-commerce is partly a headwind for shopping centres (though click and collect isn't a negative), so diversification is a smart strategy in my view.

In the HY25 result, the business reported it achieved like-for-like net property income (NPI) growth of 3%, which is pleasing amid the challenging economic environment and elevated interest rates.

It's expecting to pay a distribution of 24.7 cents per unit in FY25, which would translate into a distribution yield of approximately 7.25%. It's also trading at a 26% discount to its net tangible assets (NTA) per security of $4.57 as at 31 December 2024. That's an appealing discount, in my eyes.

Charter Hall Long WALE REIT (ASX: CLW)

This REIT is even more diversified than the first ASX 200 share I mentioned. It owns industrial and logistics warehouses, service stations, retail buildings with long-term rental contracts, telecommunications exchanges, office buildings, data centres, and 'social infrastructure'.

Its property portfolio is 99.8% occupied, and its weighted average lease expiry (WALE) is 9.7 years. This means the average tenant is locked in for almost a decade, which is a lot of rental income already contracted.

The ASX 200 share has tenants like Endeavour Group, Australian government entities, Telstra Group Ltd (ASX: TLS), BP, Metcash Ltd (ASX: MTS), Coles, and David Jones.

In the first half of FY25, the business reported like-for-like net property income growth of 3.5%. Its rental income is helped by both inflation-linked increases and fixed annual increases.

The business aims to pay out 100% of its rental profits each year, enabling a very good distribution yield. It's expecting to pay a distribution per security of 25 cents in FY25, which translates into a future yield of approximately 6.5%.