When you first start investing you might focus on quality growth shares that offer potentially strong returns like Afterpay Touch Group Ltd (ASX: APT). After all, if things don’t go to plan, you still have plenty of time to recover your losses.
But as you near retirement I believe it is prudent to put these types of investments on the back-burner in favour of those offering income and capital preservation.
Three shares which I think are perfect for a retirement portfolio right now are as follows:
Coles Group Ltd (ASX: COL)
Investors looking for shares that provide a combination of growth and income might want to consider this supermarket giant. I think Coles is well-positioned to deliver solid total returns for investors over the next decade thanks to its refreshed strategy. This strategy aims to deliver $1 billion in cumulative savings by FY 2023. Another positive is the company’s generous dividend policy which will see Coles pay out between 80% and 90% of its earnings to shareholders. I estimate this means a forward fully franked 3.7% dividend yield.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
I think Sydney Airport would be a great option for a retirement portfolio. Thanks to the combination of increasing global tourism, its position as the main gateway into and out of Australia, and a recovery in domestic tourism, I believe it is well-positioned to grow its income and its dividend at a solid rate over the next decade. At present Sydney Airport’s shares offer a trailing 4.35% dividend yield.
Transurban Group (ASX: TCL)
One of my favourite dividend shares for retirees is this toll road operator. It has consistently grown both its earnings and distributions at a solid rate over the last decade. This was certainly the case in FY 2019 when it reported a 12.3% increase in proportional EBITDA to $2,016 million. Pleasingly, management remains positive on its outlook and further solid growth looks likely this year. As a result, the company plans to increase its distribution by 5.1% to 62 cents per security. This equates to a forward 4.2% distribution yield.
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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. 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.