If I were retired I’d want my portfolio to be full of shares that could be described as reliable. If I’d stopped working I wouldn’t have the ability to replenish lost capital on a high-risk idea.
I’d also want a good level of income from my retirement capital, as that would dictate how much I could spend each year.
With that in mind, here are two ideas:
Rural Funds Group (ASX: RFF)
Rural Funds is Australia’s largest listed farmland real estate investment trust (REIT).
It owns farms in a variety of sectors including cattle, poultry, vineyards, almonds, macadamia and cotton.
As I’m sure you’re aware, farms have been useful assets for a very long time and will likely continue to be for the rest of our lifetimes.
Tenants take on all of the operating risk, Rural Funds has bought enough water credits for the tenant’s needs.
Rural Funds is steadily increasing its diversification in different climates, sectors and states through acquisitions. The current drought is not really affecting its properties, thankfully.
Management have a long-term goal of increasing the distribution by 4% each year. I think it will be successful because of the rental increases built into its contracts based on either CPI or a fixed 2.5% increase.
Rural Funds currently has a distribution yield of 5%.
Future Generation Investment Company Ltd (ASX: FGX)
As a retiree I’d really like to pick shares that are doing good for me and improving the world around them.
Future Generation could be one of the best ideas in this regard. It is a fund of funds where 1% of its NTA is donated each year to charities that focus on helping young people. That’s why it’s called ‘Future Generation’.
There are no management fees or performance fees involved despite investing in some of the best Australian-focused funds. So, if its overall portfolio outperforms the ASX Index then shareholders keep the difference.
Some of the fund managers that are allocated the most money from Future Generation are Paradice, Wilson Asset Management and Bennelong.
Future Generation aims to increase its dividend each year and it currently has a grossed-up dividend yield of 4.9%.
Both of these shares could provide dependable income each year and I think they’re well worth considering for a retirement portfolio. I also believe they both could provide market-beating total returns, that’s why they’re in my portfolio.
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Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.