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3 high quality ASX shares for a retirement portfolio

James Mickleboro
Retire Wealthy

When you’re in your 20s or 30s you might seek the high risk, high reward gains from fledgling growth shares. After all, if things don’t go quite to plan, you have time to recover your losses.

But as you enter retirement, I think these types of investments should take a backseat. Instead I would focus on investments that offer income and capital preservation.

Three shares which I think are great options for retirees right now are as follows:

Coles Group Ltd (ASX: COL)

I think this supermarket giant would be a good addition to a retirement portfolio. This is because of its defensive qualities, solid growth prospects thanks to its refreshed strategy, improving trading conditions, and its favourable dividend policy. In respect to the latter, Coles intends to pay out between 80% and 90% of its earnings to shareholders each year. I estimate that this means that its shares currently provide a fully franked forward 3.5% dividend. Which isn’t bad in this low interest rate environment.

Telstra Corporation Ltd  (ASX: TLS)

Another top option for a retirement portfolio could be Telstra. I like the telco giant due to its improved outlook and generous dividend yield. Thanks to a combination of cost cutting, rational competition, and a positive growth outlook in the mobile business, I believe Telstra is well-placed to return to growth from FY 2022. In the meantime, I remain confident that Telstra’s free cash flow is more than sufficient to support its current dividend of 16 cents per share. Based on this, Telstra’s shares offer a forward fully franked ~4.2% dividend yield.

Transurban Group  (ASX: TCL)

Another top option for a retirement portfolio could be Transurban. The leading toll road operator has a collection of vital roads in Australia and North America. Due to the quality of these assets and their strong pricing power, I feel Transurban is in a position to continue growing its distribution at a solid rate over the next decade. This looks set to be the case in FY 2020, with management intending to lift its distribution by 5.1% to 62 cents per security. This equates to a forward 3.9% forward yield.

The post 3 high quality ASX shares for a retirement portfolio appeared first on Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020