The Motley Fool

3 ASX shares to buy for rock solid retirement income

It’s getting quite hard for investors to find good sources of income these days because of how low interest rates have gone.

But we still need to be careful about the prices we pay for some shares. For example, Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) are sought after dividend shares, but their valuations have risen substantially, they may be too expensive.

Either way, if you’re looking for rock solid dividends then these three shares could be ideas:

Brickworks Limited (ASX: BKW) 

Brickworks hasn’t seen a dividend cut for 40 years, it has one of the best dividend records on the ASX. In FY19 it grew its dividend by 6%, which is a solid increase compared to typical dividend shares like banks and telcos.

The Brickworks dividend is essentially supported by just the distributions from its property trust and the dividends from its investments. The Brickworks share price is also backed by these investments’ underlying values.

Investors get the building products businesses in Australia and US business for free. Australian building products are expected to grow with the recovery of the property market. The US building product business has also long-term growth prospects as it aims to improve its profit margins.

It currently has a grossed-up dividend yield of 4.3%.

ARB Corporation Limited (ASX: ARB) 

ARB is 4×4 car accessories business which has seen steady growth in Australia and the US. There has been a steady trend over the long-term for households to buy larger vehicles, even if they don’t use them for off-road travel.

ARB has steadily been increasing its ordinary dividend over the past two decades, with a few special dividends paid along the way too.

The 4×4 accessories business has seen consistent growth of its earnings and it currently has a grossed-up dividend yield of 3%.

Ramsay Health Care Limited (ASX: RHC) 

Ramsay is one of the largest private hospital operators in the world after its recent Capio acquisition in Europe.

The hospital business is aligned with the ageing population tailwind. To take advantage of this it is building new hospitals and expanding existing ones so that it has a larger total addressable market.

I like that Ramsay is aiming to increase its exposure to healthcare earnings outside of the hospitals, which would make it even more of a generalised healthcare play. 

It has grown its dividend every year since 2000 and currently has a grossed-up dividend yield of 3%.

Foolish takeaway

All three of these businesses have excellent dividend track records. I think that Brickworks probably has the best chance of maintaining its excellent dividend record because its underlying assets are the most diverse. Continuing population growth and regeneration of cities should see more earnings and dividend growth for Brickworks.

These leading shares could also be excellent ideas for long-term dividends.

3 More Dividend Shares For Reliable Income

When Edward Vesely -- our resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 147%) and Collins Food (up 105%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.

In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.

Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.

Click here now to access this free report.

Motley Fool contributor Tristan Harrison 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 ARB Limited, Brickworks, and Ramsay Health Care 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.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.