Almost ready to retire? Why I’d buy undervalued ASX dividend shares right now

If you’re about to hit retirement and are looking forward to your golden years, well, firstly, congratulations. Reaching a comfortable retirement is something every Australian should be proud of. But perhaps this is also a time to start considering ASX dividend shares.

The primary concern of planning a retirement is, of course, ensuring a reliable income stream to fund said retirement. Chances are most of us, young or old, would retire tomorrow if we had an income stream that would allow it. At least for a while.

Fortunately, I think there are plenty of undervalued dividend shares to choose from on the ASX share market today that could help fund a retirement for decades to come.

A good way of measuring a dividend shares’ valuations is by looking at both dividend yield and price-to-earnings (P/E) ratios.

For example, with a P/E ratio of 19.78 and a trailing dividend yield of 3.59%, I don’t believe that Commonwealth Bank of Australia (ASX: CBA) shares are looking too compelling at present.

Where can we find cheap ASX dividend shares?

But one market sector that I think is compelling for investors right now is ASX retail shares. Fears abound at present that the rising interest rates and inflation we have seen in 2022 will hit retailers hard. But this has pushed many ASX retail shares to extremely low valuations.

Just take one of the best retailers in the country, JB Hi-Fi Ltd (ASX: JBH). JB shares have had a disappointing year in 2022 thus far. The electronics purveyor has fallen 7.8% year to date. But this leaves JB shares on a P/E ratio of just 9.43 as of the close of trade on Friday. And that comes with a fully-franked dividend yield of 7.03%.

Harvey Norman Holdings Limited (ASX: HVN) is another retail name everyone knows and (in some cases) loves. Yet we see a similar story here, with Harvey Norman shares down 13.4% in 2022. At Friday’s close, it’s on a P/E ratio of just 6.7. This has lifted Harvey Norman’s trailing dividend yield to a hefty 8.6% at present. And yes, that’s fully franked as well.

Dusk Group Ltd (ASX: DSK) and Adairs Ltd (ASX: ADH) are two more retail shares that are offering similar valuations and trailing dividend yields. In fact, Dusk’s fully franked dividend yield is sitting at 10.7% right now.

So I believe there are plenty of undervalued ASX dividend shares on the market today that can help fund an impending retirement.

The post Almost ready to retire? Why I’d buy undervalued ASX dividend shares right now appeared first on The Motley Fool Australia.

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More reading

• Should CBA shares be in your ASX stocking in December?
• Top ASX shares to buy in December 2022
• The 3 best-performing ASX 200 bank shares in November revealed
• Why Bubs, Collins Foods, Dusk, and Mayne Pharma shares are falling today
• Is a stock market crash coming for us in 2023?

Motley Fool contributor Sebastian Bowen has positions in Adairs and Dusk Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs and Harvey Norman. The Motley Fool Australia has positions in and has recommended Adairs and Harvey Norman. The Motley Fool Australia has recommended Dusk Group and Jb Hi-Fi. 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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