When you first start investing, you might look for high risk, high reward growth shares.
After all, if things don’t go to plan, you have plenty of time to recover.
But when you’re in retirement, I think it is best to focus on income and capital preservation.
With that in mind, below I have picked out two shares which I think are safe options for retirees to buy right now. They are as follows:
Coles Group Ltd (ASX: COL)
The first option to consider for a retirement portfolio is this supermarket giant. I’m a big fan of Coles due to its solid growth prospects, refreshed strategy, its generous dividend policy, and its defensive qualities. The latter was on display for all to see with its strong performance in FY 2020 despite the pandemic.
For the 12 months ended 30 June 2020, Coles delivered a 6.9% increase in sales to $37.4 billion and a 7.1% lift in net profit after tax to $951 million. It also revealed that its same store sales growth had been strong early in the financial year. And while its growth is likely to moderate a touch once the pandemic passes, I remain confident that it is still well-positioned to grow its earnings and dividend at a solid rate long into the future. For this reason, I think it could be a fantastic option for retirees today.
Telstra Corporation Ltd (ASX: TLS)
Another option for a retirement portfolio could be Telstra. While Telstra has been a terrible investment for retirees over the last few years, I believe the tide is finally turning and a return to growth could be on the horizon in the near future. This is due to its strong market position, rampant cost cutting, the easing NBN headwind, and the arrival of 5G.
In respect to the latter, I expect the upcoming release of the new iPhone to kickstart its adoption in Australia. This should be a big boost to Telstra’s all-important mobile revenues. Another positive is that the Telstra board has recently advised that it will do all that it can to maintain its 16 cents per share fully franked dividend. Based on the current Telstra share price, this represents a generous 5.6% yield.
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Returns As of 6th October 2020
More reading
- Is the Coles (ASX:COL) share price set for a big Santa Rally?
- 2 blockbuster blue chip ASX shares to buy
- Top brokers name 3 ASX shares to buy today
- Could this small cap ASX telco become the next Telstra (ASX:TLS) share price?
- Why it’s always a good time to buy blue chip ASX shares
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. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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