A reliable passive income has the potential to make all the difference in a person's retirement, allowing them to enjoy their spare time with a regular income stream. Fortunately, S&P/ASX 200 Index (ASX: XJO) dividend shares can help to provide just that.
Companies that call the index home are generally larger in size and more established than their smaller peers. Indeed, some ASX 200 shares are even blue-chip stocks – market leaders with a strong financial position and track record.
Why I would invest in ASX 200 dividend shares for retirement
ASX 200 shares might appeal to those looking for a long-term, stable investment. While they may be less likely than, say, growth shares to post massive returns, they normally have a well-carved market position and competitive advantages that can help them sail through negative tides.
Additionally, many ASX 200 stocks hand over a portion of their profits to investors in the form of dividends. That means a strategically built portfolio of dividend-paying shares could see a retiree receiving a regular income without lifting a finger.
On top of that, dividend stocks can hedge a retiree's financial position against inflation. That's because they're capable of providing returns greater than the bite inflation takes out of a savings account.
Though, no investment is guaranteed to offer returns or passive income.
So, with all that in mind, here are three ASX 200 dividend shares that brokers rate as buys right now.
3 ASX 200 dividend shares brokers tip as buys
Wesfarmers Ltd (ASX: WES)
Wesfarmers shares could lift nearly 19% from their current price of $46.82 to trade at $55.60, according to broker Morgans.
The expert likes the company's retail portfolio and management. It also expects the company to grow its dividends to $1.82 per share this fiscal year – up from $1.80 in financial year 2022.
Telstra Group Ltd (ASX: TLS)
Morgans also believes the current Telstra share price – $3.86 – undervalues the telecommunications giant.
The broker also thinks the ASX 200 favourite will pay out 16.5 cents per share this fiscal year and next. Meanwhile, its share price is tipped to rise to $4.60.
HomeCo Daily Needs REIT (ASX: HDN)
Finally, Goldman Sachs tips the HomeCo Daily Needs real estate investment trust (REIT) as a buy.
It slapped the ASX 200 share with a $1.57 price target. It also expects the stock to offer 8.3 cents of dividends per share this financial year and 8.4 cents per share next.
The REIT has paid out 8.3 cents over the last 12 months and currently trades at $1.28.
