With the cash rate likely to remain on hold until as late as 2023 and then take several years before reaching “normal” levels, if I were a retiree, I would look to the share market to grow my wealth and generate a source of income.
With that in mind, here are three fantastic ASX 200 shares that I believe would be suitable for retirees:
BWP Trust (ASX: BWP)
I think this real estate investment trust would be a great option for retirees. This is due to the quality of its property portfolio, which is predominantly leased to home improvement giant Bunnings Warehouse. Given how Bunnings is arguably one of the best retailers in the country, I believe the risk of store closures and rental defaults is extremely low. Especially given how its sales have been exceptionally strong during the pandemic and government stimulus is supporting the home improvement market. Combined with periodic rental increases, I believe BWP is well-positioned to deliver consistent income and distribution growth over the next decade. At present I estimate that its units offer a forward 4.5% yield.
Goodman Group (ASX: GMG)
I think Goodman Group would be a fantastic long term option for retirees. This property company owns, develops, and manages industrial real estate across several countries. These include properties with exposure to markets with very favourable outlooks such as ecommerce. In fact, the company has agreements with giants such as Amazon and DHL, which are at the forefront of the ecommerce boom. Given how these assets are likely to be in demand for a long time to come, I feel it bodes well for income and distribution growth in the future.
Rural Funds Group (ASX: RFF)
Another option for retirees to consider buying is agriculture-focused property group Rural Funds. I’m a big fan of the company due to the quality of its portfolio and its long term tenancy agreements. At the last count its properties had a weighted average lease expiry of approximately 11 years. Furthermore, these agreements have rental increases built into them in a way that positions Rural Funds to consistently grow its income and therefore its distribution each year. Rural Funds intends to grow its distribution by 4% to 11.28 cents per share in FY 2021. This equates to a generous yield of 5.2%.
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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. 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.
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