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3 ASX dividend shares to own in retirement

I believe ASX dividend shares offer retirees the most valuable source of income. True, share prices can be volatile. And many have been due to the recent coronavirus bear market.

But many are still paying out dividends to investors despite lower share prices. This shows that dividends typically tend to be ‘smoother’ over the long term when compared to a company’s share price. And it is this dividend which is so valuable to retirees as a source of income for living expenses.

In addition, I can’t fathom the enormous sum of money you would require to be able to live of bank interest. The future is not much brighter in this regard as economists at Westpac Banking Corp (ASX: WBC) expect the cash rate to remain at 0.25% until at least the end of 2023.

With that in mind, below are 3 quality ASX shares which I believe offer a great source of income for retirees.

Dicker Data Ltd (ASX: DDR)

Dicker Data is a leading distributor in Australia for technology hardware, software and cloud solutions. Its shares have seen consistent insider buying over the past few months with a number of directors increasing their holdings. This is seen as a bullish sign as directors would be thought to know the company better than most.

Dicker Data has also seen strong growth recently, with demand for its products increasing over the past few years. In fact, revenue in FY19 grew by 17.9%, net profit after tax (NPAT) was up 67.3% and its ordinary dividend increased by 38.6%.

The company has a policy to pay out 100% of after-tax profits as dividends. On current prices, Dicker Data has a trailing grossed-up dividend yield of 6.6%, not including a special dividend which was also paid during FY19.

Telstra Corporation Ltd (ASX: TLS)

Retirees have included Telstra as part of an income portfolio for many years. I believe the telco’s defensive and recurring revenue should help it to maintain paying dividends to shareholders during the current market crisis. Additionally, analysts at Goldman Sachs believe Telstra shares to be undervalued, recently retaining their buy rating and $4.20 price target.

Telstra cut its dividend at the beginning of 2019. This was thanks to a decline in profit which was largely blamed on the impact of the NBN. However, with Telstra now paying a lower dividend, and given the defensive nature of its revenues and cost-cutting strategies, its current dividend appears relatively safe in my view. Telstra currently offers investors a grossed-up trailing dividend yield of 7.5% (inclusive of NBN special dividends).

Tassal Group Limited (ASX: TGR)

Tassal Group is Australia’s largest salmon farmer and has recently included prawns into its portfolio. Prawn sales to Coles Group Limited (ASX: COL) commenced in February, with prawns having a higher $/kg yield when compared to Tassal’s traditional salmon sales.

Tassal Group is also forecasting a stronger second half and earnings growth in FY20 and beyond. However, this outlook was provided in mid-February and no updates have been provided since in relation to COVID-19.

Tassal shares have not been protected from the recent share market declines and have been sold off along with the broader market. However, I believe it to offer more defensive earnings than many companies since we all still need to eat. As such, I think Tassal shares offer great value today and provide a grossed-up trailing dividend yield of 5.3% on current prices.

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Motley Fool contributor Michael Tonon owns shares of Tassal Group Limited. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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.

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