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.
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 top option for retirees. This is because I believe it has all the qualities required to be a core holding in a retirement portfolio. It has defensive earnings, a strong market position, solid growth prospects, and a favourable dividend policy. Another positive is the decent yield on offer with its shares at present. I estimate that Coles shares offer an estimated forward ~3.9% dividend yield.
Rural Funds Group (ASX: RFF)
Another top option for retirees to consider is Rural Funds. It is an agriculture-focused property group which owns a portfolio of assets across several agricultural industries. One of the key attractions to the company for me is its long-term earnings visibility. This is thanks to its long-term tenancy agreements and the periodic rent increases built into contracts. It is because of this visibility that Rural Funds was able to recently reiterate its distribution guidance for both FY 2020 and FY 2021. It expects to pay a distribution of 10.85 cents per share in FY 2020 and then 11.28 cents per share in FY 2021. This equates to yields of 5.6% and 5.8%, respectively.
Wesfarmers Ltd (ASX: WES)
A final option for retirees to consider buying is Wesfarmers. I think the conglomerate is a great option due to its solid short and long term growth potential. In respect to the former, its Bunnings business has been experiencing very strong demand for home improvement items during the pandemic. Given how this business accounts for almost two-thirds of its earnings following the Coles spin-off, I believe this bodes well for its FY 2020 result. Looking further ahead, its portfolio of quality assets look well-positioned for growth and are likely to be bolstered by earnings accretive acquisitions. For now, I estimate that its shares offer a forward fully franked ~4% dividend yield.
