With term deposits offering paltry returns, I believe the share market remains the best place for retirees to invest their hard-earned money.
Whilst there are a good number of quality options for income investors, two quality dividend shares in particular jump out at me today. They are as follows:
Coles Group Ltd (ASX: COL)
The first ASX 100 share for retirees to consider buying is this supermarket giant. I think it would be a quality option for income investors in this low interest rate environment. This is because I believe Coles is well-placed to grow its earnings and dividend at a solid rate over the next decade thanks to its positive sales outlook and potential margin expansion from its focus on automation. The latter focus is expected to cut costs materially and make the company significantly more efficient.
Another positive is its strong and defensive business model which has proven capable of delivering growth whatever the economy throws at it. Based on the latest Coles share price, I estimate that it provides investors with a fully franked 3.9% FY 2021 dividend yield.
Telstra Corporation Ltd (ASX: TLS)
While income investors may be a little wary of investing in Telstra after years of dividend cuts, I'm confident its dividend has reached the bottom and the cutting is now over. This is because with the NBN headwind easing and rational competition returning, Telstra appears well-positioned to generate sufficient free cash flows in the coming years to maintain its 16 cents per share fully franked dividend.
But perhaps best of all, is that I expect the company's T22 strategy to result in the telco giant returning to growth once peak pain from the NBN rollout is reached in the next couple of years. This could mean Telstra starts to grow its dividend again from as soon as FY 2023. For now, based on the current Telstra share price, it offers investors an attractive fully franked 4.7% dividend yield.
