If you are nearing retirement, it may be time to start focusing on capital preservation. This means investing in lower risk shares rather than fledgling growth shares.
But which shares might be good options for a retirement portfolio? Listed below are a couple of shares that could be worth considering for a well-balanced retirement portfolio. They are as follows:
Lifestyle Communities Limited (ASX: LIC)
The first ASX share for retirees to look at is Lifestyle Communities. It builds, owns, and operates land lease communities which provide affordable housing options to Australians over 50. Lifestyle Communities’ land lease model allows working, semi-retired, and retired people to downsize their family home to free up equity in retirement whilst enjoying resort style living.
Goldman Sachs is very positive on the company due to strengthening demand for land lease options. This is being driven by the ageing population, with older Australians increasingly looking to enhance retirement by releasing equity from the family home.
According to Goldman’s analysis, it estimates that 2% to 3% of people over 65 are living in a land lease community. However, it believes this could rise to 5% over the medium term. As a result, it believes Lifestyle Communities is well-placed for growth in the coming years.
In light of this, the broker recently retained its conviction buy rating and lifted its price target on the company’s shares to $21.60. This compares to the latest Lifestyle Communities share price of $19.40. Goldman is also forecasting consistent dividend growth over the next few years. Though, due to its strong share price gains in recent years, the yields will be on the low side in the near term.
Suncorp Group Ltd (ASX: SUN)
Another ASX share to consider for a retirement portfolio is Suncorp. It is one of Australia’s leading insurance and banking companies. As well as the eponymous Suncorp brand, it also owns the AAMI, Apia, Bingle, GIO, Shannons, and Vero brands.
It was a positive performer again in FY 2021, delivering a 42.1% jump in cash earnings to $1,064 million. This strong form not only allowed the insurance giant to declare a special dividend, it was also able to announce a $250 million on-market share buyback.
The team at Macquarie responded positively to the news. Following Suncorp’s full year results, the broker retained its outperform rating and lifted its price target to $13.60.
Macquarie is forecasting fully franked dividends of 58 cents per share in FY 2022 and then 66 cents in FY 2023. Based on the current Suncorp share price of $12.45, this will mean 4.7% and 5.3% yields, respectively.