ASX dividend shares can be very useful choices for retirees because of their passive income potential. If I were 65, I'd want stocks with good dividend yields and revenue growth potential.
There are several companies within the S&P/ASX 300 Index (ASX: XKO) that have a dividend growth record of consecutive annual increases going back at least a decade. However, plenty of those have grossed-up dividend yields of below 4%.
For retiree investors who want a strong dividend yield immediately, I'm going to discuss two ASX dividend shares with relatively high payouts that could make good investments for 65-year-olds (or older).
Coles Group Ltd (ASX: COL)
Coles is one of the biggest supermarket businesses in Australia. I think it can offer very defensive earnings – we all need to eat, after all. In a downturn, consumers may decide to buy more food from the supermarket rather than eating out.
Impressively, the ASX dividend share has grown its annual dividend per share every year since it started paying cash to shareholders in 2019.
In the FY24 result, Coles delivered what I'd expect from the company. Revenue grew by 5.1% to $43.6 billion, and the reported continuing operations net profit after tax (NPAT) grew by 8.3% to $1.13 billion.
The board of directors declared a final dividend per share of 32 cents, up 6.7%. This brought the full-year dividend to 68 cents per share, up 3%.
At the current Coles share price, that translates into a grossed-up dividend yield of 5.2%.
Charter Hall Long WALE REIT (ASX: CLW)
Commercial property can be a very effective investment for investors focused on passive income because it can deliver high levels of rental income and long-term capital growth.
The ASX dividend share owns a diversified portfolio across various property segments, including distribution centres, office buildings, Bunnings buildings, agri-logistics, telco exchanges, service stations, pubs and bottle shops, food manufacturing, waste and recycling management, and so on.
The business has rental growth built into its contracts, with either fixed annual increases or inflation-linked increases. This is helping offset much of the pain of higher interest rates. In FY24, it achieved 4.7% annual like-for-like property income growth.
It has strong portfolio statistics, including a 99.9% occupancy rate, a 10.5-year weighted average lease expiry (WALE), and 99% of the portfolio being leased to 'blue-chip' tenants.
This ASX dividend share is expected to pay a distribution per unit of 25 cents in FY25, which translates into a forward distribution yield of 6.4%.
