S&P/ASX 200 Index (ASX: XJO) retirement shares are ones that offer good passive income and defensive operations, in my view. With possible interest rate cuts by the RBA in the next 12 months, this could be a good time to invest rather than sitting in cash.
There is plenty of uncertainty out there right now, such as US tariffs and their flow-on impacts, ongoing conflicts, and so on.
In this environment, investors may like to own ASX defensive shares with what they have to offer.
The two ASX 200 retirement shares below are two of my favourites.
Charter Hall Long WALE REIT (ASX: CLW)
This is one of the larger real estate investment trusts (REITs) on the ASX, with a portfolio value of $5.5 billion. It owns a diversified portfolio across several subsectors, including retail (with long-term rental contracts), industrial and logistics, office, data centres, and social infrastructure.
I like the diversification because it lowers the risk of being too exposed to one area of the property sector. It also gives the business the flexibility to find the best opportunities for rental profit and/or capital returns.
I view this business as particularly defensive because it has numerous blue-chip tenants, such as Endeavour Group Ltd (ASX: EDV), Australian government entities, Telstra Group Ltd (ASX: TLS), and BP. These tenants are signed on for the long term, giving the ASX 200 retirement share a weighted average lease expiry (WALE) of more than 9 years.
It's expecting to pay a distribution yield of 6.4% in FY25.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is a diversified investment conglomerate that has been listed for over 120 years!
The ASX 200 retirement share is invested in numerous sectors, including telecommunications, resources, financial services, electrification, agriculture, and swimming schools. Some of its biggest investments include Brickworks Ltd (ASX: BKW), TPG Telecom Ltd (ASX: TPG), and New Hope Corporation Ltd (ASX: NHC).
I like how the business has been expanding and diversifying its portfolio in recent years to unlisted assets, including private equity (privately-held businesses) and credit. This makes it less exposed to share market volatility and gives it more avenues to grow.
On the passive income side of things, it has paid a dividend every year in its existence (for more than 120 years). Plus, it has grown its annual ordinary dividend every year since 2000.
The last two dividends declared by the business come to a grossed-up dividend yield of 3.8%, including franking credits.
I believe this business is one of the most likely on the ASX to grow its dividend this year and next year.
