Uncertainty has increased in the last 12 months in the global economy, largely due to US tariffs. In this era, dividend-focused investors may want rock-solid retirement income from ASX shares, rather than ones that are much more exposed to economic volatility.
Of course, no passive income is guaranteed, but some businesses have a very good track record of paying pleasing dividends and payout growth looks likely from the two businesses I want to highlight.
I'm already a shareholder of both businesses. I wouldn't be surprised if I buy more shares sooner rather than later (particularly the first one!).
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Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
This ASX share is the largest position in my portfolio because of my confidence in long-term capital and dividend growth. There are plenty of reasons to like it for retirement dividend income.
It's an investment conglomerate that has been operating for over a century. It's invested across a variety of industries including building products, industrial properties, resources, farming, telecommunications, electrification, financial services, swimming schools, credit, healthcare, funds management and plenty more. This is strong diversification.
Some of the biggest ASX share investments currently include Brickworks Ltd (ASX: BKW), TPG Telecom Ltd (ASX: TPG), New Hope Corporation Ltd (ASX: NHC), Tuas Ltd (ASX: TUA) and BHP Group Ltd (ASX: BHP).
It is regularly expanding the portfolio thanks to retaining some of the cash flow it doesn't pay out as a dividend each year. This helps grow the capital value of the portfolio and assists sending the Soul Patts share price higher.
On the dividend side of things, the business has grown its payout every year since 1998, which is the best record on the ASX. It now has grossed-up dividend yield of 3.3%, including franking credits, after an 8% rise in the dividend payout in FY25. I think this is a great option for retirement income.
Centuria Industrial REIT (ASX: CIP)
This is a real estate investment trust (REIT) focused on owning industrial properties in major metropolitan locations.
The business is benefiting from strong tailwinds including e-commerce adoption, data centre growth and so on. The Centuria head of funds management, Jesse Curtis, said:
The outlook for Australian urban infill industrial real estate remains extremely favourable with a national 2.8% vacancy rate, constrained supply, and multiple tenant demand tailwinds continuing to persist. CIP's portfolio construction provides exposure to Australia's strongest performing markets with an 85% weighting to core urban infill markets and 88% exposure to the east coast. Further, CIP's average tenancy size of c.7,600sqm aligns with the deepest pool of tenant demand. These characteristics underpin the opportunity to capture significant market rental growth.
In FY25, the business delivered 5.8% like-for-like net operating income growth, which I think is a strong growth rate for a REIT.
In FY26, it's expecting to grow its rental profit (funds from operations – FFO) per security by up to 6% and the distribution is guided to grow by 3% to 16.8 cents per security. At the current Centuria Industrial REIT unit price, that translates into a forward distribution yield of 5%. I think that's a great start for retirement income.
I think this is one of the best property sectors to be invested in for long-term returns.
