2 ASX shares for strong retirement income

Are you currently retired, or perhaps your approaching retirement soon and looking for a way to get some extra income?

Either way, in my view, shares that pay strong dividend yields are a much more rewarding strategy than keeping your money in a savings account or term deposit, particularly given the current low interest rates.

It’s also a good idea to try to build your ASX share portfolio with at least 10 companies to ensure a diversified portfolio. This way you get exposure to a broad spectrum of the market.

So, with that in mind, I don’t think you can go past these 2 ASX shares: Wesfarmers Ltd (ASX: WES) and Macquarie Group Ltd (ASX: MQG). Both of these companies have strong market positions in their respective industries. They also both have strong product and geographic diversification.

Wesfarmers

Wesfarmers is a highly diversified company with operations in retail segments including general merchandise and office supplies. Wesfarmers also has market positions in industrial segments such as energy and fertilisers, and industrial and safety products. This high level of market diversification provides a strong buffer to any industry-specific challenges that may negatively impact any of its subsidiaries.

Wesfarmers’ online offerings have seen strong demand during the coronavirus crisis as many consumers have stayed away from brick-and-mortar stores. All of Wesfarmers’ retail businesses have seen combined total online sales growth of 89% for the half-year so far till early June.

Based on current earnings, Wesfarmers pays a strong forward dividend yield of 3.4%, fully franked

I am confident that Wesfarmers is well placed for strong growth over the next year or two, particularly driven by rising sales at its Officeworks and Bunnings chains.

Macquarie

Macquarie is a global financial services business. Its strategy centres on international investment banking.

I definitely prefer Macquarie as an investment option in the banking and financial segment to our big four major retail banks: Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ).

In particular, Macquarie has less exposure to the local residential property market, which may come under increasing pressure in the months ahead.

I am also attracted to Macquarie as an ASX share investment because it has become a more balanced and diversified business than it was in the past.

Macquarie currently pays an attractive partially franked forward dividend yield of 3.5%.

More reading

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• The Treasury Wine share price and this ASX 200 stock are the latest to be hit by broker downgrades today
• 3 quality ASX dividend shares to buy today
• Broker tips on how to invest for the August ASX reporting season

Motley Fool contributor Phil Harpur owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, and Westpac Banking. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. 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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