The Motley Fool

2 rock-solid dividend shares you should own in retirement

Every year a large number of baby boomers hit retirement age. Some will continue working, but others who set themselves up with income producing investments, can sit back and enjoy their golden years.

Reliable income is the goal at that point. With this in mind, here’s where I’d invest for a sustainable income stream in retirement.

Diversified United Investment Limited (ASX: DUI)

DUI is one of the most reliable LICs on the ASX. The company has never cut dividends in more than 25 years as a listed company. Quite the opposite, it has been regularly increasing the income paid to shareholders.

It holds a diversified portfolio of mostly large Aussie shares, like CSL Limited (ASX: CSL), Transurban Group (ASX: TCL) and Wesfarmers Ltd (ASX: WES).The portfolio also contains 16% weighting to international shares, through a few ETFs.

Fees are very low, at 0.15% per annum, and the current dividend yield is 5.3% including franking credits.

Brickworks Limited (ASX: BKW)

Part building products company, part investment company, Brickworks is as reliable as they come. It owns brands such as Bristile Roofing and Austral Bricks, and has large investments in an industrial property trust and a very large holding in Washington H. Soul Pattinson & Co Ltd (ASX: SOL).

The holding in Soul Patts is in fact, worth more than the market value of Brickworks. This means you’re getting the property assets and building products businesses for nothing.

As for income, Brickworks has only cut dividends once since listing in 1962. That itself is an incredible achievement. The payout ratio is currently very low at just 39%, giving the company plenty of cushion in a building downturn, and even scope to continue increasing the dividend.

Brickworks currently trades on around 11 times earnings and a dividend yield of 5.1% including franking credits.

Foolish takeaway

These two companies are about as solid as they come. I’d be happy relying on dividend payers like this as sources of retirement income. For more dividend share ideas, you can check out the brand new report just released by the Motley Fool’s expert analysts below.

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Motley Fool contributor Dave Gow owns shares of Brickworks, Transurban Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers Limited. The Motley Fool Australia owns shares of and has recommended Transurban Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended Brickworks. 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.

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