When building a retirement portfolio, I would look for S&P/ASX 200 Index (ASX: XJO) shares with defensive qualities, strong business models, positive long-term outlooks, and a track record of dividend payments
By doing this, I believe you will be left with a portfolio that has the potential to grow at a solid rate in the future whilst also providing you with a growing source of passive income in retirement.
But which ASX 200 shares could be top options for a retirement portfolio? Three that I would consider buying are listed below.
Coles Group Ltd (ASX: COL)
I think this supermarket giant could be a quality option for a retirement portfolio. That's because Coles encompasses all of the desirable traits I outlined above. This is particularly the case with its defensive qualities. You only need to look at the company's performance during the pandemic to see that.
In respect to dividends, Morgans is expecting Coles to pay fully franked dividends of 64 cents per share in FY 2023 and 66 cents per share in FY 2024. This represents yields of 3.8% and 3.9%, respectively.
Telstra Group Ltd (ASX: TLS)
Another ASX 200 share that I believe would be a great option for retirees is Telstra. It is of course Australia's largest telco, providing millions of people with internet and phone services.
If times were hard, my phone and internet would be the last things I would give up. And I'm sure I'm not alone in that. I feel this makes Telstra a defensive option for investors.
And while its growth has been lacking over the last decade, its T22 and T25 strategies have changed that. Telstra is now targeting mid-single digit underlying EBITDA (earnings before interest, tax, depreciation, and amortisation) and high-teens underlying earnings per share compound annual growth rates (CAGR) from FY 2021 to FY 2025.
Morgan Stanley expects this to underpin fully franked dividends of 17 cents per share in FY 2023 and 18 cents per share in FY 2024. Based on the latest Telstra share price, this will mean yields of 4.2% and 4.5%, respectively.
Transurban Group (ASX: TCL)
A final ASX 200 share that I would buy for a retirement portfolio is Transurban. It is a toll road operator with a collection of important roads across Australia and the United States. These include CityLink in Melbourne, WestConnex in Sydney, and the Logan Motorway in Brisbane.
I believe Transurban looks well-placed for long-term growth thanks to population growth, urbanisation, and the value of time. In respect to the latter, Transurban estimates that customers using its roads (compared to alternative routes) saved a total of 323,000 hours of travel time each workday in FY 2022.
Combined with its positive exposure to inflation (toll increases) and significant growth pipeline, I'm confident that Transurban will provide investors with a growing stream of dividends over the next decade.
For now, Citi is expecting the company to pay dividends of 53 cents per share in FY 2023 and 55.8 cents per share in FY 2024. This equates to yields of 4% and 4.2%, respectively.
