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Why I’d buy Coles and these ASX dividend shares for a retirement portfolio

When you first start investing you might seek the high risk, high reward gains from fledgling growth shares. After all, if things go wrong you have plenty of time to recover your losses.

But as you enter retirement, I think these types of investments should take a backseat. Instead I would focus on investments that offer income and capital preservation.

Three shares which I think are perfect for retirees right now are as follows:

Coles Group Ltd (ASX: COL)

I think that this supermarket giant would be a good option for a retirement portfolio. This is due to its defensive qualities, solid growth prospects, strong market position, and favourable dividend policy. In respect to the latter, when the company demerged from Wesfarmers Ltd (ASX: WES) it revealed it would pay out between 80% and 90% of its earnings to shareholders. Based on this guidance, I estimate that its shares currently offer investors a fully franked forward 5% dividend.

Dicker Data Ltd (ASX: DDR)

Another top option for a retirement portfolio could be this wholesale distributor of computer hardware and software. I think Dicker Data would be a great option due to its robust business model, solid growth prospects, high levels of insider ownership, and its quarterly dividends. This year management expects its strong form to continue and has provided earnings growth guidance of around 10%. In light of this, it expects to lift its dividend to 22 cents per share in FY 2019, which works out to be a fully franked 5.3% forward dividend yield.

Transurban Group (ASX: TCL)

Transurban could be worth considering for a retirement portfolio. It is one of the largest toll road operators in the world with roads in Melbourne, Sydney, Brisbane, and North America. Steadily growing traffic numbers and toll prices have allowed Transurban to grow its distribution at a solid pace over the last decade. I expect this to remain the case over the next decade, making it a great buy and hold option. At present its units offer a distribution yield of 4.5%.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET, Dicker Data Limited, and Transurban Group. 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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