Earlier today I had a look at a couple of shares that might be suitable for investors with a high risk tolerance. You can read about them here.
On this occasion, I’m going to move down to the opposite end of the risk scale, to companies which would be suitable for those in retirement with a lower tolerance for risk.
Here’s why these ASX shares could be suitable for a well-balanced retirement portfolio:
Transurban Group (ASX: TCL)
The first option to consider is Transurban. It is one of the world’s leading toll road operators and the owner of a collection of important roads in Australia and North America.
Due to the quality of these assets, the time savings they offer, and their strong pricing power (in non-COVID times), Transurban appears to be well-placed to increase its dividend at a solid rate over the next decade once the pandemic passes.
Analysts at Ord Minnett think now could be a good time to invest. Late last month the broker upgraded Transurban’s shares to an add rating with a price target of $16.50. The broker is forecasting a 42.8 cents per share dividend in FY 2021 and then a 56.9 cents per share dividend in FY 2022.
Based on the latest Transurban share price of $13.69, this will mean forward yields of 3.1% and 4.15%, respectively.
Wesfarmers Ltd (ASX: WES)
Another ASX 200 share that could be a good option for a retirement portfolio is Wesfarmers.
Thanks to the quality of its portfolio, which includes brands such as Bunnings, Catch, and Kmart, Wesfarmers appears well-positioned for growth over the long term. Also boosting its growth should be its industrial businesses, which have positive outlooks as well. This is certainly the case with its Kidman Resources business, which is exposed to the lithium boom.
In addition to this, Wesfarmers has a proud history of making successful earnings accretive acquisitions. Given its strong balance sheet, it has the capacity to make more of these in the future.
Last week analysts at Macquarie upgraded the company’s shares to an outperform rating with a $60.00 price target. The broker has pencilled in dividends of 150.3 cents per share and 155.9 cents per share for the next two years. Based on the current Wesfarmers share price, this represents fully franked forward yields of 2.7% and 2.8%, respectively.
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Returns As of 15th February 2021
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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