Thank goodness that ASX shares are an option for retirees to invest in.
The Reserve Bank of Australia (RBA) might decide to cut interest rates this year, perhaps to as low as 0.75% if things don’t go according to plan with the Australian economy. That’s no good for term deposits, Australian bonds or bank interest.
With that change on the horizon, these ASX shares could be good alternatives to consider:
Magellan Global Trust (ASX: MGG)
If Australian interest rates do head lower then the Australian dollar could drop in value, so Magellan Global Trust could benefit from that change as its investments are overseas based. It’s a listed investment trust (LIT) that seeks to generate investment returns from the highest-quality shares in the world.
Its top holdings include Alphabet (Google), Facebook, Apple, Visa, MasterCard and Starbucks. It also holds a nice level of cash for protection and opportunities.
Magellan has a long-term record of outperformance compared to its global MSCI benchmark and the trust targets a 4% distribution yield compared to the value of its assets.
Rural Funds Group (ASX: RFF)
Rural Funds is a real estate investment trust (REIT) farm landlord that only leases to very high-quality tenants that are either listed on a stock exchange or are run by Rural Funds’ manager, Rural Funds Management.
You can’t really build a lot more farms in Australia like you can with childcare centres or office buildings which can lead to oversupply. Plus, there is always growing demand for food with rising populations. Rural Funds has long-term leases with its tenants with rental increases built into the contracts, which provides a solid level of income (growth) certainty.
It owns various farm types including cattle, cotton, almonds, poultry, vineyards and macadamias. These farms are diversified by location and climactic conditions as well.
Rural Funds aims to grow the distribution by 4% a year and currently has a distribution yield of 4.6%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts could be the most dependable dividend option for a retiree to consider. It’s an investment house that has been operating for over a century and has paid a dividend every year in that time.
The fact that it has zero debt on its own balance sheet is very reassuring to me and speaks of how the company positions itself for long-term success. Its investments are also long-term focused, with particular attention paid to cashflow.
Soul Patts has increased its dividend every year since 2000 and currently has a grossed-up dividend yield of 3.6%.
Each of the above suggestions are very good ideas for solid dividend income in my opinion, that’s why they are in my own portfolio. At the current prices I would buy shares of Soul Patts, as its share price has fallen significantly in recent weeks.
If you’re looking for additional ideas for retirement income then these top ASX shares could be ideas.
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Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. 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.