If you're getting ready to retire, picking the right ASX dividend shares can be a tough decision. Planning for a time when there is no weekly (or fortnightly) paycheque coming through the door does amp up the pressure a little.
The ASX has hundreds of dividend shares to choose from. But here is one that I think could have the potential to fulfil all the needs of a retiree in one fell swoop.
Plato Income Maximiser Ltd (ASX: PL8) is a listed investment company (LIC) that is built for retirees, or as the provider puts it, "designed specifically with SMSF and pension-phase investors in mind".
This LIC holds a portfolio of ASX divided shares, chosen for their dividend and franking credit potential. Some of its current holdings include BHP Group Ltd (ASX: BHP), South32 Ltd (ASX: S32), Woodside Energy Group Ltd (ASX: WDS) and Westpac Banking Corp (ASX: WBC)
A retiree share that pays monthly dividends
Plato Income Maximiser pays out a dividend every month to its investors. These typically come fully franked too. At the last share price, the yields are the same.
So that's a lot of dividend income investors can enjoy in retirement. But let's talk about performance. There are many income-focused investments on the ASX. But more than a few tend to prioritise income above capital preservation, which can be detrimental to investors' overall financial returns in the long run.
So as of 31 October (the latest figures available), the Palto Income Maximiser had delivered a total return of 4.5% over the preceding 12 months. That includes this LIC's management fee of 0.8% per annum. That looks pretty good against the ASX 200 benchmark's loss of 0.5% over the same period.
Over the past three years on average, this LIC has averaged a return of 7.5% per annum, 7.1% of which came in the form of dividend income. Again, that beats the benchmark's return of 6.2% per annum over the period.
The Plato Income Maximiser has also returned an average of 8.9% per annum (7.6% of which came from dividends) since its inception in April 2017. Once again, that beats out the benchmark, which returned an average of 8.4% per annum.
So this might make the Plato Income Maximiser LIC a perfect option to consider for an investor approaching retirement today. Monthly dividends that come fully franked, a performance that has consistently beaten the market… what more could a retiree ask for?
