While exciting tech shares are great to have in some portfolios, these types of shares are largely unsuitable for retirees that are aiming to preserve their wealth and generate income.
I think the best shares for a retirement portfolio are the ones you can put in the bottom drawer and collect dividends from every six months.
Three shares that tick a lot of boxes for me in this regard are listed below. Here’s why I like them:
Australia and New Zealand Banking Group (ASX: ANZ)
Although the banks are having a hard time right now, I feel it is safe to say that in ten years there will be little change to the big four’s standing and expect them to still be paying out the vast majority of their earnings as dividends. Due to its high CET1 ratio, low bad debts, and recent out of cycle rate rise, I think ANZ Bank is one of the best options in the sector right now. Especially considering that its shares provide a trailing fully franked 5.7% yield.
National Storage REIT (ASX: NSR)
Another top option for retirees could be this real estate investment trust which is focused on self-storage assets. While it is by no means a high growth industry, I still believe population growth and downsizing means National Storage is capable of growing its earnings and distribution at a solid rate over the coming years. In FY 2018 the trust posted a strong result which saw underlying earnings grow 12.5% to $51.4 million. This was partly driven by a 3.8% increase in same-centre revenue per available square metre to $220 and a 330 basis points rise in occupancy levels to 80.8%. Its shares now offer a trailing yield of 5.6%.
Rural Funds Group (ASX: RFF)
Rural Funds is a real estate property trust which I feel would be another great option for retirees. It is focused on agricultural assets and has a diverse and quality portfolio which I believe has put it in a great position to continue delivering solid earnings and distribution growth over the next few years. In FY 2019 management plans to pay a distribution of 10.43 cents per unit, equating to a forward yield of 4.8%.
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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 RURALFUNDS STAPLED. The Motley Fool Australia has recommended National Storage REIT. 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.