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 of franking credits.
The good news is that the ASX offers a number of shares that are paying dividends that could be considered as part of a diversified investment portfolio. Three that I like are listed below:
Coles Group Ltd (ASX: COL)
Due to its defensive qualities and positive long-term outlook, I think this supermarket giant could be a great long term option. Especially with the company’s focus on reducing costs materially through the use of automation positioning it well to grow both its earnings and dividend at a solid rate over the next decade. I estimate that Coles’ shares provide a forward fully franked 4% dividend yield at present.
Kogan.com Ltd (ASX: KGN)
This ecommerce company has been a bit of a mixed performer over the last couple of years, but returned to form in the third quarter of FY 2019 when it posted a massive 96.4% increase in EBITDA compared to the prior corresponding period. Due to the positive online shopping tailwind and its expansion into other verticals, I feel Kogan is capable of further strong growth for many years to come. This could mean its trailing fully franked 2.5% dividend yield grows materially over the next decade.
Webjet Limited (ASX: WEB)
Webjet is an online travel agent which I believe is well-placed to continue its solid growth over the next decade thanks to the shift to online travel booking, its popular brands, and its Rezchain and Rezpayments technologies. The latter are expected to play a key role in Webjet’s shift to an even more profitable business structure in the future which will see its costs reduce and EBITDA margin widen. Its shares offer an estimated 3.1% FY 2020 dividend yield.
And this fourth share could also help bring forward your retirement thanks to its growing dividends.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Kogan.com ltd and Webjet Ltd. 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.