If you're in search of a source of income in retirement, then I think the share market is a great place to look.
Especially given the ultra-low interest rates on offer with traditional income-generating assets.
And while a number of companies have recently deferred or cancelled their dividends, there are still a handful that continue to pay shareholders.
Three dividend shares that I think would be great options for retirees are listed below. Here's why I like them:
Coles Group Ltd (ASX: COL)
I think this supermarket giant would be a great option for retirees due to its defensive earnings, strong market position, and its refreshed strategy. In respect to the latter, Coles is aiming to deliver $1 billion in cumulative savings by FY 2023. It expects to achieve this through efficiencies and the use of automation. Combined with expansions and same store sales growth, I expect this to support solid earnings and dividend growth over the next five years. For now, I estimate that its shares will provide a 4% dividend yield over the next 12 months.
Rural Funds Group (ASX: RFF)
Another option for retirees could be this agriculture-focused property group. I like Rural Funds due to the quality of its assets and its positive long-term distribution outlook. Thanks to its long-term tenancy agreements and periodic rent increases, Rural Funds should be able to grow its distribution at a solid rate long into the future. An added bonus is that it pays its distribution in quarterly instalments, providing investors with a regular source of income. The company's units offer investors a trailing 4.8% distribution yield at present.
Transurban Group (ASX: TCL)
Transurban is a leading toll road operator which owns a collection of key roads in Australia and North America. Prior to the coronavirus pandemic, these roads were consistently reporting the perfect mix of increasing traffic and higher toll prices. Unfortunately, lockdowns and travel restrictions look likely to cause a sharp reduction in traffic volumes in the near term. This could lead to an equally sharp cut to its final dividend. However, if you're happy to be patient, then I think it would be worth taking advantage of the pullback in its shares. Transurban's roads won't take long to recover, nor will its distributions. I estimate that its shares provide a 4% FY 2021 yield.
