In retirement, owning ASX dividend shares makes a lot of sense, in my view. There are many benefits for people in their 60s — or at any age — who want to earn passive income.
Owning a portfolio of stocks is very easy – we don't need to manage the businesses. It's simpler than an investment property as there's no dealing with real estate agents, tenants or repairs. And quality ASX dividend shares can deliver a large or mostly reliable dividend.
Let's look at two that really appeal to me now and if I were retired.
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Charter Hall Long WALE REIT (ASX: CLW)
Some of the leading ASX dividend shares have yields that are noticeably better than what an investor can gain with a term deposit. This real estate investment trust (REIT) is one of those higher-yielding opportunities, and it also has a lot of income stability.
The Charter Hall Long WALE REIT owns a diverse property portfolio, which may be exactly what some retiree investors want, without the hassle of managing a real estate empire themselves.
The portfolio includes pubs and bottle shops, offices leased to government entities, telecommunication exchanges, fuel and service stations, grocery and distribution centres, food manufacturing, waste and recycling management, retail, banking, financial and defence services.
It has tenants signed up to long leases which helps provide income security and visibility for investors. The average weighted average lease expiry (WALE) is around 10 years, which is excellent.
This ASX dividend share provides a high dividend yield partly because it distributes all of its rental profit each year. It also pays its distributions quarterly, which is good for investor cash flow.
The REIT expects to pay a distribution of 25 cents per unit, which is a yield of 6.4%. The distribution could grow in the coming years thanks to rental increases linked to inflation, while many of the ASX dividend share's other contracts have fixed annual increases.
Sonic Healthcare Ltd (ASX: SHL)
I believe retirees aged 65 may like the consistency and defensive dividends paid by an ASX healthcare share like Sonic.
Sonic Healthcare is a large, global pathology business that plays an important part in the healthcare system in countries like Australia, the United States, Germany, Switzerland, and the United Kingdom. I think the ASX healthcare share's revenue and earnings are defensive — healthcare demand seems fairly consistent each year, regardless of how much (or little) GDP growth there is.
The recent FY25 trading update demonstrated its ability to grow despite challenging wider economic conditions. In the first four months of FY25, total revenue grew by 10%, and operating profit (EBITDA) increased by more than 10%. The company is regularly making acquisitions to boost its revenue, which will hopefully boost profit margins in the longer term.
The ASX dividend share has grown its dividend most years over the past 30 years, with only a few years where it maintained the payout. The last decade has seen the dividend increase every single year. Of course, future dividend growth is not guaranteed.
According to Commsec, the dividend yield is projected to be around 4% in FY25, excluding any franking credits.
