When building a retirement portfolio, investors can't just pick any ASX share and hope for the best.
The key is to focus on stability, reliable income, and long-term growth to ensure a portfolio that can support your golden years.
Dependable dividends
A great retirement portfolio is built on reliable dividend income. Investors should look for ASX shares with a solid track record of paying dividends—even during economic downturns. Companies in defensive sectors like utilities, banking, and consumer staples tend to generate stable cash flows, allowing them to maintain predictable dividends.
Financial strength matters
Not all ASX shares are created equal. Companies with strong balance sheets and robust cash flows are better positioned to navigate tough times. On the other hand, heavily indebted businesses may struggle to maintain dividend payments, particularly in a high-interest rate environment. Investors ought to check financial metrics like the debt-to-equity ratio and interest coverage ratio to assess a company's financial health.
Don't ignore growth
While steady income is essential for retirees, growth is just as important to ensure your portfolio keeps up with inflation. ASX shares in sectors like technology and healthcare offer long-term capital appreciation potential. In addition, companies with sustainable competitive advantages and clear growth drivers can help balance stability with future upside.
Diversification is key
A well-constructed retirement portfolio shouldn't rely too heavily on a single company or sector. Diversification across industries and asset classes can help reduce risk and smooth out market volatility. By spreading investments across high-quality ASX shares, investors can build a more resilient portfolio capable of delivering income and growth through all market conditions.
With that in mind, which ASX shares could be great additions to a retirement portfolio? Here are two that analysts are tipping as buys.
APA Group (ASX: APA)
Macquarie has an outperform rating and $8.13 price target on this leading Australian energy infrastructure company's shares.
In respect to dividends, the broker is forecasting dividends per share of 57 cents in FY 2025 and then 57.5 cents in FY 2026. Based on the current APA Group share price of $6.82, this equates to 8.3% and 8.4% dividend yields, respectively.
Coles Group Ltd (ASX: COL)
Citi has a buy rating and $21.00 price target on this supermarket giant's shares.
As for income, the broker is forecasting dividends per share of 72 cents in FY 2025 and then 84 cents in FY 2026. Based on the current Coles share price of $19.50, this equates to 3.7% and 4.3% dividend yields, respectively.
