If I were a retiree, I'd buy these ASX shares this week

Retirees may love these stocks for dividends.

| More on:
A mature-aged couple high-five each other as they celebrate a financial win and early retirement

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX shares that pay dividends can be a wonderful source of passive income — which might be exactly what retirees, in particular, are looking for.

The Australian Securities Exchange (ASX) includes many of the country's leading businesses, such as Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Telstra Group Ltd (ASX: TLS).

However, the biggest ASX blue-chip shares aren't necessarily the most resilient or the best dividend-paying options. If I were a retiree, I'd want to have the following two stocks in my income-focused portfolio.

Medibank Private Ltd (ASX: MPL)

Medibank is the leading private health insurer in Australia with two main brands – Medibank and ahm.

People tend to value their health highly, so I'd guess that many would continue paying for private health insurance even during an economic downturn.

One of the growth drivers of the business is the ageing population in Australia, which may mean more people sign up to have private health insurance for any operations or specialised care they may need. Indeed, Australia's overall population is rapidly increasing too, which is helping grow the number of potential policyholders.

Medibank's FY24 first-half result demonstrated its steady growth — group revenue from external customers grew by 3.3% to $4 billion, with group operating profit growing by 4.2% to $319.4 million.

The ASX share had a generous dividend payout ratio of 75.5% in HY24, enabling it to pay a dividend per share of 7.2 cents (a 14.3% year-over-year rise).

According to Commsec, the business could pay a grossed-up dividend yield of 6.2% in FY24.

Centuria Industrial REIT (ASX: CIP)

This business is the largest pure-play industrial real estate investment trust (REIT) in Australia.

It benefits from strong tenant demand that is skewed to urban markets as industrial users prioritise proximity to a large population. There is limited new supply within these markets – the REIT's manager Jesse Curtis recently said:

…rental growth is expected to be prolonged providing the opportunity for continued positive rental reversion. Additionally, CIP's embedded development pipeline provides the optionality to unlock further value to take advantage of the mismatch between supply and demand and deliver value to unitholders.

The ASX share is seeing enormous rental growth – in the FY24 first-half result it reported positive re-leasing spreads of 51%. That means that new rental contracts are showing a 51% increase compared to the old rental rate those buildings were on.

The business expects to pay a distribution of 16 cents per unit in FY24, which is a forward distribution yield of 4.6%. I think it can provide stable and resilient rental profits for retirees.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Retirement

Couple holding a piggy bank, symbolising superannuation.

3 of the best ASX 200 shares to buy for your retirement portfolio

Analysts think these blue chips could be worthy of a spot in a retirement portfolio.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.

Should you manage your own superannuation?

Most of us can use an SMSF. But should we?

Read more »

A mature-aged couple high-five each other as they celebrate a financial win and early retirement

Key actions for Baby Boomers and Gen X to take now for an excellent retirement

Findex provides 5 investment tips for both Baby Boomers and Gen Xers to help secure their retirement.

Read more »

A group of seven young people of different genders and cultural backgrounds stand in a group with serious expressions wearing casual young persons' attire.

Key actions for Millennials and Gen Z to take now for a good retirement

Young Australians have time on their side to better plan and execute their investments.

Read more »

Couple holding a piggy bank, symbolising superannuation.

4 ASX retirement shares to buy in May

Analysts think these stocks could fit nicely in a retirement portfolio.

Read more »

An older man wearing a helmet is set to ride his motorbike into the sunset, making the most of his retirement.

What's the average Australian superannuation balance at age 70 in 2024?

The average super balance at age 70 might shock you.

Read more »

A middle-aged man working from home looks at his mobile phone with a laptop open on the table in front of him.

Will you need to keep working after retirement?

Two-thirds of Australians say they plan to continue working beyond their retirement age.

Read more »

parents putting money in piggy bank for kids future

Is the Bank of Mum and Dad now expanding to superannuation?

Three in four Australians are planning to give some of their superannuation as an inheritance to loved ones.

Read more »