It’s getting pretty tough to find ASX shares that would be well suited for a retiree’s portfolio these days.
The problem is that low interest rates have sent the share prices of many defensive shares beyond what I would call decent value for retirees, such as Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD).
I think these three ASX shares would be much better for retirees:
Rural Funds Group (ASX: RFF)
Rural Funds has seen its share price rise thanks to the lower interest rates as well, but I still think it’s a solid option because its income is essentially locked in thanks to its rental contracts with rental increases built into them from high-quality tenants such as Select Harvests Limited (ASX: SHV) and Treasury Wine Estates Ltd (ASX: TWE).
It has a decent forward yield of just over 4.5% and the distributions could keep going higher with the farmland real estate investment trust (REIT) continuing to invest in productivity improvements at its farms, which boosts its rental income further.
WAM Leaders Ltd (ASX: WLE)
WAM Leaders is a listed investment company (LIC) which has a focus on the large businesses on the ASX. Its top holdings are fairly similar to the ASX 20, but different enough that it has outperformed the S&P / ASX 200 Accumulation Index by 1.1% per annum since inception in May 2016 whilst holding a bit of cash as well.
It uses some of the profit it makes to pay a steadily-growing dividend. It currently has a grossed-up dividend yield of 6.5%, which is attractive for retirees in this era in my opinion.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
I believe that Soul Patts could be the best business on the ASX for a retiree to own. As a retiree, I would want to know that my year to year dividends were going to be stable and growing. Soul Patts definitely fits that mantra.
It has paid a dividend in every year of its existence going back over a hundred years, including through world wars and economic crashes. Indeed, its current dividend growth streak goes back to 2000. If you only owned Soul Patts and just focused on the dividend, you wouldn’t have noticed the GFC.
Soul Patts has a trailing grossed-up dividend yield of 3.7%, but its forward grossed-up dividend yield is probably 3.8%.
I think all three of these shares would be solid options for a retiree portfolio. But if I could only choose one it would definitely be Soul Patts due to its excellent history and many other attractive qualities.
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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, Sydney Airport Holdings Limited, Transurban Group, Treasury Wine Estates Limited, 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.
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