If you're nearing retirement, it may be time to start focusing a little on capital preservation and income.
But which shares might be suitable? Listed below are a couple of shares that could be good options for a well-balanced retirement portfolio. Here's what analysts are saying about them:
Image source: Getty Images
Lifestyle Communities Limited (ASX: LIC)
The first ASX share that could be a good option for a retirement portfolio is Lifestyle Communities.
It builds, owns, and operates land lease communities which provide affordable housing options to Australians over 50.
Analysts at Goldman Sachs are very positive on the company. This is due to strengthening demand for land lease options which is being driven by Australians increasingly looking to enhance retirement by releasing equity from the family home. They commented:
Over the medium-term, LIC's accelerating development pipeline, growing rental/DMF revenues, and favorable exposure to more affordable markets should underpin an EPS CAGR of 21% over FY22-25 in our view.
Goldman Sachs has a conviction buy rating and $25.75 price target on the company's shares. The broker is also expecting a growing income stream for investors. Though, at this stage, the yields are expected to start at ~1% in FY 2023.
Suncorp Group Ltd (ASX: SUN)
Another ASX share that could be worth considering for a retirement portfolio is Suncorp.
It is one of Australia's leading insurance and banking (for the time being) companies. As well as the eponymous Suncorp brand, it also owns the AAMI, Apia, Bingle, GIO, Shannons, and Vero brands.
The team at Morgans are positive on Suncorp. They were pleased with its performance in FY 2022 and believe its shares are "inexpensive" at the current level. It has an add rating and $13.70 price target on its shares. The broker said:
We would describe this result as a broadly solid underlying performance, with good 2H22 GWP growth and GI underlying margin expansion. […] We lift our SUN FY23F/FY24F EPS by ~5% mainly on higher GWP growth expectations in future years. Our SOTP valuation falls to $13.70 reflecting SUN's lower excess capital level. ADD maintained, we see SUN as inexpensive trading on ~12x FY23F PE and a 6% dividend yield.
As mentioned above, Morgans is expecting generous yields in the near term. It is forecasting fully franked dividends per share of 69.4 cents in FY 2023 and 77 cents in FY 2024. Based on the current Suncorp share price of $10.88, this will mean yields of 6.4% and 7.1%, respectively.
