Investors aged 50 and over would do well to look at ASX shares as the best way to protect and grow their money.
The outlook for property looks very uncertain with CoreLogic now reporting that national property prices are going backwards and rents are under pressure. Cash in the bank isn’t going to earn much interest.
I think that investors aged over 50 could go for these two ASX shares:
Share 1: Brickworks Limited (ASX: BKW)
Brickworks is a diversified property business. Most people would know it for its Australian building products division which sells a variety of items including bricks, paving, masonry, roofing, precast and so on. The ASX share recently acquired some US brickmakers. That opens up a large new market, it diversifies its earnings and hopefully improve the efficiencies there.
Obviously COVID-19 is going to have a short-term impact on the construction industry. But the best time to buy cyclical shares is when they’re in the tough part of the cycle.
But there are two other divisions that make Brickworks a great, reliable investment for investors aged over 50. The first is an industrial property trust that it owns 50% stake of, along with partner Goodman Group (ASX: GMG). The property trust delivers defensive rent, which is good in times like this. Over the longer-term, rental income and the value of the trust should grow as two new high-tech distribution warehouses are completed and leased to Amazon and Coles Group Limited (ASX: COL).
The other division is a large shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. This company itself is a great long-term investment as a conglomerate which is steadily growing its value and dividend for Brickworks. It is becoming more diversified as time goes on. Soul Patts recently made an investment into agriculture and plans to invest in regional data centres.
Brickworks is a great ASX share for investors aged over 50 because it hasn’t cut its dividend for over 40 years. At the current Brickworks share price it’s trading with a grossed-up dividend yield of 5%.
Share 2: Magellan Global Trust (ASX: MGG)
This is a listed investment trust (LIT) which targets the highest-quality shares in the world. ‘High-quality’ means aspects like a strong balance sheet, great brand power, high profit margins and resilient business models.
In this COVID-19 era, it’s tech shares in-particular that are proving robust because their services are delivered digitally. People can stay in their home and still use their Microsoft Office products, buy things online with their Mastercard or Visa card, watch YouTube or browse Facebook.
Magellan Global Trust owns shares like Alibaba, Alphabet (Google), Atmos Energy, Microsoft, Tencent, Facebook, Visa, Mastercard, Reckitt Benckiser and Novartis. I think the ASX share is well suited to a retiree portfolio because it’s positioned for both defence and growth.
In terms of income, it aims to pay a 4% distribution yield on its net asset value (NAV). Not a bad yield in the current environment. The trust currently has a high level of cash (18%) in the portfolio, so it can shelter shareholders against another market selloff if there is one later this year. That cash can then be used to snap up cheap opportunities.
The ASX share can provide a good combination of income, income growth and capital growth for retirees.
At the current Magellan Global Trust share price it’s trading at a 5% discount to the intraday indicative NAV.
The trust recently announced that the distribution for December 2020 will be 3.58 cents per unit, an increase of 8.5% on the prior corresponding distribution.
Both of these ASX shares offer defensive distribution, a good starting yield and good potential growth. At the current prices I think I’m drawn to Magellan Global Trust due to the relatively high Australian dollar, high quality holdings and the defensive cash position.
Where to invest $1,000 right now
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Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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.