If you're an investor looking to find a few high-quality dividend-paying ASX shares that you can use as a core of a retirement portfolio, you're probably looking for some specific characteristics.
Those retirement shares, you might argue, should have a decent starting dividend yield, for one. And preferably one that comes with full franking credits. But they may also want to have a somewhat diversified earnings base to provide a reasonable degree of capital protection.
After building out this core, investors can always add smaller positions to supplement that all-important income.
So today, let's talk about two ASX dividend shares that I think fit this bill nicely and would be excellent choices to build a retirement portfolio around.
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Two ASX dividend income shares to build a retirement portfolio around
Wesfarmers Ltd (ASX: WES)
Wesfarmers has been a popular choice for ASX investors seeking reliable dividend income for decades, and for good reason. This diversified ASX 200 conglomerate has been making generous shareholder payments for many years and has consistently demonstrated a savvy and prudent approach to capital management, benefiting its investors.
Wesfarmers is most famous for its ownership of some of Australia's best retailers, including Bunnings, Kmart and OfficeWorks. But this dividend share also owns a diverse range of other companies, spanning mining and chemical manufacturing, to pharmacies and a clothing line.
This provides the company with a diversified earnings base, from which it has consistently paid a decent dividend. With full franking credits attached too.
Given this ASX dividend share has recently pulled back significantly (and thus is available with a higher dividend yield), it may be a good opportunity for income investors to build out a position for their retirement portfolios.
Australian Foundation Investment Co Ltd (ASX: AFI).
The Australian Foundation Investment Co, or AFIC for short, is a listed investment company (LIC) that has also been present on the ASX for decades. Like most LICs, AFIC works by owning its own underlying portfolio of ASX shares, which it manages on behalf of its shareholders. This portfolio mostly consists of other ASX blue chip companies, although AFIC also does some investing in international markets. Diversification: tick.
This ASX dividend share has been around since 1928. Over this long history, it has consistently demonstrated that its prudent management style has paid off for investors. The AFIC share price has been stagnant over 2025, though, so it might be a good time to take a look at this company too, given its fully franked dividend yield is well over 3.5% today.
