When you first start out investing, you might seek the high risk, high reward returns from growth shares. After all, you have time on your side if things don’t go to plan.
But as you enter retirement, I think it is best to focus on investments that offer income and capital preservation.
Three shares which I think are great and safe options for retirees right now are as follows:
Australian Ethical Investment Limited (ASX: AEF)
The shares of this ethical fund manager fell very heavily during the coronavirus pandemic. This was due to concerns over its performance fees and funds under management during the crisis. And while these concerns are not unwarranted, I don’t believe it will be long until things return to normal and funds start flowing back in. Especially given the increasing popularity of ethical investing with investors. Another positive is that Australian Ethical Investment has a decent cash balance and no debt on its books.
Coles Group Ltd (ASX: COL)
Another top option for a retirement portfolio could be this supermarket giant. I’m a big fan of Coles due to its solid growth prospects thanks to its refreshed strategy, its generous dividend policy, and its defensive qualities. The latter has certainly been on display during the coronavirus pandemic. Due to stockpiling and more eating at home, Coles looks well-positioned to deliver strong profit growth in FY 2020. This should put the company in a position to grow its dividend this year.
Telstra Corporation Ltd (ASX: TLS)
A final option for a retirement portfolio could be Telstra. As with Coles, Telstra’s defensive qualities have been firmly on display during the pandemic. It is one of only a handful of companies that has been able to reaffirm its guidance for FY 2020. Outside of the pandemic, I believe Telstra’s outlook is the brightest it has been in years and suspect a return to growth could be just a couple of years away. In the meantime, I’m optimistic the company will be able to maintain its dividend at the current level.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. 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.