When you're in your 20s and 30s you might invest in fledgling growth shares for their high risk, high reward gains. After all, if things don't work out, you have plenty of time to recover your losses.
But when you enter retirement, I think these types of investments should be restricted to just a very small part of your portfolio. Instead I would focus predominantly on investments that offer income and capital preservation.
Three shares which I think are great options for retirees right now are as follows:
BWP Trust (ASX: BWP)
The first option to consider is BWP. This real estate investment trust is the landlord of hardware giant Bunnings. Given the quality of the Bunnings business, I feel the probability of store closures and rental defaults is very low. Combined with periodic rental increases, I believe this leaves BWP well-positioned to continue growing its income and distribution at a solid and predictable rate over the next decade. At present its shares offer an estimated forward 4.5% distribution yield.
Coles Group Ltd (ASX: COL)
Another top option for a retirement portfolio could be this supermarket giant. I believe Coles is suitable because of its defensive qualities, its solid growth prospects due to its refreshed strategy, and its strong market position. Another positive is its favourable dividend policy. With Coles intending to pay out between 80% and 90% of its earnings to shareholders each year, I estimate that it will pay a 57.7 cents per share dividend in FY 2020. This equates to a fully franked forward 3.6% dividend.
Telstra Corporation Ltd (ASX: TLS)
A final option to consider is Telstra. I think the telco giant's outlook is greatly improved thanks to the progress of the NBN rollout, the return of rational competition, and the early success of the T22 strategy which is aiming to cut costs materially. Combined, I believe Telstra could return to growth potentially as soon as FY 2022. In the meantime, I believe its free cash flows are sufficient to maintain its 16 cents per share dividend. This equates to a fully franked 4.3% dividend yield.
