Arguably one of the best ways to set yourself up for an early retirement is by having a passive income stream that is reliable and has the potential to grow over time.
I believe that dividend shares are one of the best investments to achieve this and are especially useful in retirement thanks to the benefit (currently) of franking credits.
The good news is that the ASX offers a number of reliable dividend shares that investors can consider as part of a diversified investment portfolio. Three that I like are listed below:
Coles Group Ltd (ASX: COL)
I think this recently listed supermarket giant could be a good option for a retirement portfolio due to its defensive qualities and the generous expected dividend yield on offer from its shares. A broker note out of the Macquarie equities desk late last year revealed that its analysts expect Coles to pay a fully franked dividend of 65.7 cents per share in FY 2019. If this forecast is accurate then it means Coles shares currently provide a forward 5.3% dividend yield.
National Australia Bank Ltd (ASX: NAB)
Although I think that all the banks are in the buy zone right now, one of my favourites would have to be National Australia Bank. This is because of its exposure to the small to medium sized business lending market. Recent data has shown that this side of lending is performing well and has been tipped by Goldman Sachs to outperform home lending this year for the first time since 2011. Overall, I feel this puts the bank in a good position to maintain its $1.98 per share dividend in FY 2019 and remain on a path to meet its required CET1 ratio target by 2020. Based on this dividend, NAB's shares offer a fully franked 8% yield.
Wesfarmers Ltd (ASX: WES)
Another great option for a retirement portfolio could be this conglomerate. Although its recent trading update revealed that its normally reliable Kmart business struggled over the Christmas period, this was largely the result of a strong prior period and its decision to stop selling DVDs. So with its shares pulling back a touch, I think now could be a great time to consider an investment. Based on a note out of Morgans last week, its analysts expect Wesfarmers to declare a full year dividend of $1.90 per share in FY 2019. This works out to be a forward fully franked 5.8% yield.
