Retirees may like to consider ASX dividend shares for passive income in retirement because of a number of different reasons.
For starters, ASX dividend shares can pay investors an impressive dividend yield. People can use stocks to unlock a lot more sustainable cash flow than other types of assets may be capable of.
These businesses can also achieve capital growth over the long term, adding to the returns for investors. Retirees can build a portfolio of names that can provide diversification.
There has been a lot of volatility since the start of 2022. Lower share prices give investors the opportunity to buy these businesses with a better yield, and hopefully, there's a better chance of capital growth in the short term and long term.
I think retirees could utilise these ASX dividend shares to create strong annual passive income.
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Shaver Shop Group Ltd (ASX: SSG)
Shaver Shop is not exactly a retail juggernaut, but it aims to be the leader when it comes to hair removal in Australia.
I think it's in a good section of the retail market – whether the economy is booming or not, hair removal products could remain in demand.
The ASX dividend share has been steadily growing its scale, which is helping improve profitability. Shaver Shop has increased its dividend each year since it started paying a dividend in 2017. That's a good record in my opinion.
Estimates on Commsec suggest the business could pay an annual dividend per share of 10.2 cents in FY23, which would be a grossed-up dividend yield of 13.5%. Further dividend growth is expected in FY24 and FY25.
GQG Partners Inc (ASX: GQG)
This is a global fund manager which offers investors a number of different investment strategies around the world.
GQG has committed to paying a quarterly dividend of 90% of its distributable earnings. This can enable the business to have a large dividend yield.
It helps that the fund manager is seeing good funds under management (FUM) inflows, while the investment funds are delivering long-term outperformance. If FUM rises, then earnings can grow and that means the dividend can grow as well.
Commsec numbers suggest that GQG could pay an annual dividend per share of 12.1 cents in 2023. This translates into a forward dividend yield of 8.3%.
Metcash Limited (ASX: MTS)
Metcash is a diversified business. It has a hardware division that owns the brands of Mitre 10, Total Tools and Home Timber & Hardware. The ASX dividend share supplies IGA supermarkets around Australia. It also supplies independent liquor retailers including Cellarbrations, Thirsty Camel, The Bottle-O, IGA Liquor, and Porters Liquor.
The business has seen a shift in shopper behaviour since COVID-19, with an increase in local neighbourhood purchasing.
Metcash continues to invest in its business to become even better – it's focused on areas like loyalty, digital and e-commerce, data, network optimisation and development, as well as addressing legacy technology through 'project horizon'.
The ASX dividend share has grown its dividend each year since 2020. Commsec numbers suggest it could pay an annual dividend per share of 22.1 cents in FY23. This would be a grossed-up dividend yield of 8.1%.
Foolish takeaway
Investing a total of $85,000 spread across these three ASX dividend shares would earn a total of $8,466 of annual dividend income, which amounts to monthly dividends of $705. I think that would be a very promising amount for retirees.
