When you’re in your 20s or 30s you might seek the high risk, high reward gains from fledgling growth shares. After all, if things don’t go to plan, 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 great options for retirees right now are as follows:
Coles Group Ltd (ASX: COL)
This supermarket giant could be a good addition to a retirement portfolio. This is because of its defensive qualities, solid growth prospects due to its refreshed strategy, strong market position, and favourable dividend policy. In respect to the latter, Coles intends to pay out between 80% and 90% of its earnings to shareholders each year. Which I estimate to mean that its shares currently provide a fully franked forward 3.5% dividend.
National Australia Bank Ltd (ASX: NAB)
If you don’t already have the banks in your portfolio then I think NAB could be worth considering. Although bank shares have been strong performers recently, I still see a lot of value in them and believe they could provide solid total returns for investors over the coming years if the housing market rebounds. And based on recent data from the Australian Bureau of Statistics, this appears to be happening. In July new loans issued to households increased by a sizeable 3.9% to $32 billion, which was the biggest increase in almost five years.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
Finally, I think Sydney Airport would be a good option for a retirement portfolio. Although domestic passenger numbers have been falling this year, the number of international visitors through its gates continues to rise. I believe this and its strong pricing power, will allow the company to continue growing its income and dividend at a modest rate for many more years to come. At present Sydney Airport’s shares offer a trailing 4.8% dividend yield. Another bonus is that its status as a bond proxy should support its shares if bond yields continue to narrow.
And here are three more quality shares that I think would be great options for retirees right now thanks to their growing earnings and dividends.
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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 Sydney Airport Holdings Limited. The Motley Fool Australia owns shares of National Australia Bank 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.