Things are getting financially harder for people in their 60s or older, I think ASX shares could be the answer.
It’s no longer enough to live off the safe income from a term deposit these days. A $500,000 term deposit may only generate income of around $10,000.
ASX shares have the ability to generate solid dividends and also achieve long-term capital growth. These three could be great long-term options:
Rural Funds Group (ASX: RFF)
Rural Funds Management aims to increase the distribution by 4% a year, which it has done so since it started paying a distribution a few years ago.
The farmland commercial property trust receives growing rental income from a variety of tenants who utilise Rural Funds’ properties including cattle, vineyards, almonds, macadamias and cotton.
A recent decline in the share price has seen the distribution yield rise, the FY20 yield is currently 6.3%.
It has recently decided to exit the poultry industry, the sale price has validated the asset prices that Rural Funds discloses in its accounts.
Duxton Water Ltd (ASX: D2O)
Duxton Water owns water entitlements and aims to increase the dividend for shareholders each year. It has successfully done this since the start of the dividend payments in 2017.
The value of water goes up and down depending on how much it rains each year. Australia is going through a particularly dry period at the moment, which has seen the value of water entitlements go up.
It’s currently possible to buy shares of Duxton Water at a much cheaper price than its underlying net asset value (NAV) and it has a grossed-up forward dividend yield of 5.6%.
Brickworks Limited (ASX: BKW)
Brickworks has maintained or grown its dividend every year since 1976, which is one of the best records on the ASX.
It has a diverse earnings base of building products, property earnings and investments. Australia is a great place to do business and it has made a few acquisitions in the US to make it become the biggest brick manufacturer in the north east of the US. Overseas diversification is a good move.
Brickworks has a grossed-up dividend yield of 4.4%.
Each of these businesses have attractive features for retirees, particularly for dividends. Brickworks may be able to generate the biggest returns with its expansion into the US market, but Rural Funds may be able to offer the most consistent growth with a solid yield too.
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Motley Fool contributor Tristan Harrison owns shares of DUXTON FPO and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia has recommended Brickworks and DUXTON FPO. 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.