Motley Fool Australia

3 ASX dividend shares to own for retirement income

Retired man reclining in hammock with feet up, retire early
Image source: Getty Images

Certain ASX dividend shares may be useful for retirees to consider for retirement income.

These businesses may be able offer reliable dividend income:

Coles Group Ltd (ASX: COL)

This is one of the biggest supermarket businesses in Australia. According to the ASX, it has a market capitalisation of around $24.5 billion.

The ASX dividend share hasn’t been an independent company from Wesfarmers Ltd (ASX: WES) for long, but its dividend in FY20 was bigger than FY19. Ex-parent Wesfarmers also has a focus on dividends to ensure that shareholders receive returns.

In FY20 the company saw sales revenue growth of 6.9% to $37.4 billion and earnings before interest and tax (EBIT) grew by 4.7% to $1.39 billion. Net profit went up 7.1% to $951 million. The company saw elevated demand due to COVID-19 demand for pantry stocking.

The final FY20 dividend was increased by 14.6% to 27.5 cents per share.

In the first quarter of FY21, Coles has seen continued revenue growth. Total first quarter sales were up 10.5% to $9.6 billion. The liquor segment, which includes Liquorland, saw sales growth of 17.4% to $852 million. Coles Express saw 10.3% sales growth to $291 million. Coles supermarkets saw sales growth of 9.7% to $8.46 billion.

According to Commsec, Coles has an estimated grossed-up dividend yield of 5.2% for FY31.

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT) which owns a diversified portfolio of different farms including almonds, cattle, vineyards and macadamias.

The ASX dividend share aims to grow its distribution by 4% every year, which it has been successful at doing since listing.

Rural Funds generates higher rental profits from two main sources. The first is that there is rental indexation built into its contracts that are linked to either CPI inflation, or have a fixed 2.5% increase, with some contracts having occasional market reviews.

Another source of rental growth is when Rural Funds invests in productivity improvements at the properties to increase the capital value and the long-term rental potential. Examples of those investments include water points for animals and irrigation for crops.

The ASX dividend share will infrequently make an acquisition of a farm which may increase diversification and be accretive for rental earnings per unit.

In FY21, Rural Funds is expecting to pay a distribution of 11.28 cents per unit. At the current Rural Funds share price that equates to a forward distribution yield of 4.5%.  

Amcor plc (ASX: AMC)

Flexibles and rigid packaging manufacturer Amcor has been regularly growing its dividend for many years.

The latest result, being the FY21 half-year report, included a dividend increase for investors from US 11.5 cents to US 11.75 cents per share.

Amcor reported that its adjusted earnings per share (EPS) grew by 16% in constant currency terms to 33.3 cents, with adjusted EBIT growing 8% to US$743 million.

The ASX dividend share has been purchasing hundreds of millions of dollars of shares, which improves the earning power of each remaining share for shareholders.

Amcor is also working on cost synergies with its Bemis acquisition. It has achieved $35 million of Bemis cost synergies in the first half and it’s expecting $70 million of cost synergies of approximately $70 million in FY21.

At the current Amcor share price, it has a dividend yield of 4.4%.

These Dividend Stocks Could Be Your Next Cash Kings (FREE REPORT)

Motley Fool Australia's Dividend experts recently released a brand-new FREE report revealing 3 dividend stocks with JUICY franked dividends that could keep paying you meaty dividends for years to come.

Our team of investors think these 3 dividend stocks should be a 'must consider' for any savvy dividend investor. But more importantly, could potentially make Australian investors a heap of passive income.

Don't miss out! Simply click the link below to grab your free copy and discover these 3 high conviction stocks now.

Returns As of 15th February 2021

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended Amcor Limited and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Related Articles…

Latest posts by Tristan Harrison (see all)