Investors in their 60s may be wondering where is safe to invest these days.
Term deposits seem almost useless with how little interest you can get from them these days.
I think the only way to go is with quality ASX shares that can provide a reliable source of income year after year.
That’s why I think the following ASX shares could be good choices for investors in their 60s or older:
Rural Funds Group (ASX: RFF)
Rural Funds is a real estate investment trust (REIT) which owns farmland and leases it to high-quality tenants such as Select Harvests Limited (ASX: SHV).
I think commercial property is a good way to achieve income because they receive regular cashflow from tenants who are usually contracted to pay for all of the operating costs. Indeed, Rural Funds doesn’t take on any of the operational risk of the farming, although it does own substantial water entitlements for its tenants to use.
Rural Funds owns a variety of farm types including almonds, macadamias, cattle, poultry cotton and vineyards.
With some form of rental increases locked into all of its contracts, it’s no wonder Rural Funds can predict distribution growth of 4% per annum for the foreseeable future.
It currently offers a distribution yield of 4.4%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is an investment conglomerate that has been around for over a century. It has paid a dividend every single year during that time, which is a very reassuring fact for investors who rely on income.
It has a concentrated, yet diverse, portfolio of shares such as TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and Australian Pharmaceutical Industries Ltd (ASX: API). These positions are only such large holdings because they have done so well for Soul Patts over time. The newer positions may well grow into big holdings over the long-term.
The company has no debt on its balance sheet and aims to grow the dividend every year, which has done since 2000. It has delivered impressive market-beating total shareholder returns over the long-term and currently has a grossed-up dividend yield of 3.7%.
Arena REIT No 1 (ASX: ARF)
Arena is another REIT, it invests in important social infrastructure. Its property portfolio is mostly childcare buildings, but it also owns a few healthcare properties and a few specialist disability accommodation properties.
The REIT has managed to consistently grow its operating earnings over the past few years thanks to rising rents, a long weighted average lease expiry (WALE) and 100% occupancy.
Government support for the childcare sector and lowering interest rates should help Arena’s medium-term earnings. It currently offers a distribution yield of 4.8%.
I think all three of these ASX shares are far more attractive for an investor in their 60s or over compared to a term deposit. At the current prices I would only want to really buy shares of Soul Patts because the two REITs are priced materially higher than their underlying asset value.
These leading ASX shares could also be great picks for older investor portfolios.
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Motley Fool contributor Tristan Harrison owns shares of 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. 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.