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5 ASX dividend shares you could live on in retirement

If you’re planning to retire in the near term then it might be a good time to start preparing for it.

In the past retirees could take advantage of term deposits or even high interest savings accounts to generate a sufficient income in retirement, but that simply isn’t the case any more with interest rates at record lows.

And with the Reserve Bank expected to make a further cut to the cash rate next week, it could be many years before we see interest rates at normal levels again.

In light of this, I continue to believe that the share market is the best way to generate an income in retirement at this point in time.

Five shares that you could live on in retirement are listed below:

Coles Group Ltd (ASX: COL)

I think this supermarket giant could be a good option for retirees due to its solid growth prospects thanks to its focus on automation and its dividend policy which aims to pay out between 80% and 90% of its earnings to shareholders. I estimate that its shares currently provide a fully franked forward 3.5% dividend.

National Storage REIT (ASX: NSR)

National Storage is one of the largest self-storage operators in the ANZ region with 168 centres providing tailored storage solutions to over 60,000 residential and commercial customers. It plans to continue growing its network for the foreseeable future, which I expect to support solid distribution growth. At present the company’s shares provide a 5.3% trailing distribution yield.

Scentre Group (ASX: SCG)

Another option to consider is Scentre Group, which is the owner of all the Westfield properties in the ANZ region. These properties currently welcome 535 million visitors through their doors each year, which goes some way to explaining why Scentre enjoys such a high occupancy rate. Overall, I believe Scentre is well-placed to grow its income and distribution at a solid rate in the future. At present its units offer a trailing 5.7% distribution yield.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

I think the operator of Sydney Airport is a good option for a retirement portfolio. As the main gateway into Australia, it looks set to benefit from increasing international tourism. At present Sydney Airport’s shares offer a trailing 4.8% dividend yield.

Transurban Group (ASX: TCL)

Transurban is a leading toll road operator with roads in Australia and North America. Due to the quality of its assets and strong pricing power, I believe it is well-placed to grow its dividend at a solid rate over the next decade. In FY 2020 management intends to grow its distribution by 5.1% to 62 cents per security, which equates to a forward 4.2% forward yield.

Of the five shares above, my top picks would be Coles and Transurban. I think they are among the highest quality dividend shares on the market along with these buy-rated income shares.

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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 and Transurban Group. The Motley Fool Australia has recommended National Storage REIT and Scentre Group. 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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