One of the best ways to set yourself up for a comfortable retirement is by having a passive income stream that is both reliable and has the potential to grow over time.
Investing in companies that share their profits through dividend payments is up there as one of the most efficient ways of achieving this.
But which ASX shares could you buy for a retirement portfolio? Two highly rated shares to consider are listed below:
The first option to consider for a retirement portfolio is Adairs. It is a leading retailer of homewares and home furnishings in the ANZ market. As well as having a network of stores across Australia, it also has a strong presence online through its Adairs and Mocka brands.
Trading conditions have been very positive for the company this year. This is being driven by its strong market position, the housing market boom, and a redirection in consumer spending.
And while FY 2022 will be tough due to the company cycling heightened sales this year, Goldman Sachs is expecting a return to solid growth in FY 2023. It is also forecasting fully franked dividend yields above 6% between FY 2021 and FY 2023.
Goldman Sachs currently has a buy rating and $4.80 price target on its shares. This compares to the latest Adairs share price of $4.29.
Coles Group Ltd (ASX: COL)
Another option to consider for a retirement portfolio is this supermarket giant. Coles could be a top option due to its solid long term growth prospects, generous dividend policy, and defensive qualities.
The latter qualities have been on display for all to see over the last 18 months. This has underpinned very strong sales and earnings growth during the pandemic.
And while its growth will moderate now as it cycles elevated sales from the prior period, for the reasons mentioned above, Coles remains well-positioned over the long term. This should be supported by its focus on automation, which is expected to reduce costs notably and help grow its online business.
Goldman Sachs is also very positive on Coles. It currently has a buy rating and $20.70 price target on its shares. This compares to the latest Coles share price of $17.92.