Building a portfolio for retirement income isn’t just about finding the highest dividend yields. The goal is to create a reliable stream of income that can continue growing over time, while also preserving capital through different market cycles.

That’s why I prefer a mix of high-quality companies and diversified exchange-traded funds (ETFs). Together, they can provide exposure to different sectors, geographies and income sources, reducing the reliance on any single investment.

If I were building a portfolio for retirement income today, these five ASX investments would be at the top of my list.

BHP Group Ltd (ASX: BHP)

When it comes to retirement income, BHP offers something few companies can match: ownership of some of the world’s lowest-cost mining assets.

The mining giant generates enormous cash flows from iron ore, copper and metallurgical coal, allowing it to return significant amounts of capital to shareholders through dividends over the long term.

While earnings and dividends will naturally fluctuate with commodity prices, BHP’s strong balance sheet, operational scale and diversified resource base make it one of the most dependable dividend payers on the ASX.

The growing importance of copper in electrification and renewable energy also provides an attractive long-term growth opportunity alongside its income appeal.

Commonwealth Bank of Australia (ASX: CBA)

No retirement income portfolio feels complete without exposure to Australia’s biggest bank.

Commonwealth Bank has built an enviable record of generating consistent profits through economic cycles, supported by its dominant position in home lending, deposits and business banking.

Although the shares rarely look cheap, investors aren’t simply paying for today’s earnings. They’re buying a business with outstanding profitability, a powerful brand and a history of delivering fully franked dividends.

For retirees seeking dependable income, CBA continues to earn its place.

Transurban Group Ltd (ASX: TCL)

Infrastructure can add another layer of stability to retirement income, and that’s exactly where Transurban shines.

The company owns and operates many of Australia’s busiest toll roads, generating recurring cash flows from assets that are extremely difficult to replicate. As cities continue growing and traffic volumes increase over time, Transurban benefits from both rising usage and inflation-linked toll increases across many of its concessions.

That combination has supported a long history of attractive distributions.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

No single company should determine the success of a retirement income portfolio. That’s why I’d include the Vanguard Australian Shares High Yield ETF.

VHY provides exposure to dozens of Australia’s highest-yielding dividend-paying companies across sectors including banking, resources, healthcare, telecommunications and consumer staples. Instead of relying on one dividend stream, investors receive income from a broad collection of established Australian businesses.

That diversification helps smooth income over time while reducing stock-specific risk.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

While VGS isn’t known for delivering a high dividend yield, I still believe it plays an important role in generating retirement income.

The ETF invests in hundreds of leading companies across developed markets, including many of the world’s largest technology, healthcare and consumer businesses. Those companies may pay lower dividends today, but they also offer significant earnings and capital growth potential.

Over a long retirement, that growth can help offset inflation, increase portfolio value and support rising future income through capital appreciation or selective withdrawals.

The post I’d buy these 5 ASX dividend investments for retirement income appeared first on The Motley Fool Australia.

More reading

• BHP shares may not double in 12 months but this ASX mining share could
• These ASX shares could generate $10,000 per year in passive income
• 5 top ASX dividend shares to buy in July
• BHP shares tumble as strike threat hits iron ore giant
• BHP shares slump 13% from their peak: Are the ASX mining shares a buy, sell or hold?

Motley Fool contributor Marc Van Dinther has positions in BHP Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Transurban Group. The Motley Fool Australia has recommended BHP Group, Vanguard Australian Shares High Yield ETF, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP Group Ltd (ASX: BHP) shares are arguably one of the best options in the mining sector.

However, the potential upside from current levels could be somewhat limited.

So, if you are looking for big potential returns and have a high tolerance for risk, then it could be worth checking out the ASX mining share in this article.

That’s because Bell Potter believes it could more than double in value over the next 12 months.

Which ASX mining share?

The mining share that Bell Potter is recommending to investors is Minerals 260 Ltd (ASX: MI6).

It highlights that the company has released an updated mineral resource estimate (MRE), a pre-feasibility study (PFS) and a maiden ore reserve estimate (ORE) for its 100% owned, 6.2Moz Bullabulling Gold Project (BGP) in Western Australia.

While the market didn’t react positively to these releases, with its shares crashing following their release, Bell Potter remains positive and notes that they mark the delivery of key catalysts in line with guidance and major milestones in the advancement of the BGP towards development.

Bell Potter believes BGP will be a significant, high margin, long-life project. It said:

The PFS presents a compelling case for project development. It outlines a long-life, high margin gold project that positions MI6 to become a stand-alone, mid-tier gold producer. It is based on a 2.5Moz Maiden ORE that is the largest undeveloped gold Reserve in Australia not owned by an existing producer. 

Key parameters include a maiden ORE of 90Mt @ 0.86g/t Au for 2.5Moz Au supporting a 5.0Mtpa process plant producing an average of 150kozpa (years 1-10) at average All-In-Sustaining-Costs (AISC): A$2,520/oz (years 1-10) over a 19 year mine life for CAPEX of $180m preFID plus $675m (post-FID, pre-production). MI6 estimate a project NPV5 of US$2.3b and IRR of 43% using a US$3,800/oz (A$5,500/oz) gold price. The PFS does not yet incorporate upside from today’s updated MRE.

Shares tipped to more than double

According to the note, the broker has retained its speculative buy rating on the ASX mining share with an improved price target of $1.40 (from $1.35). 

Based on its current share price of 63.5 cents, this implies potential upside of 120% for investors over the next 12 months.

Commenting on its buy recommendation, Bell Potter said:

MI6 offers gold exposure via the 6.2Moz Bullabulling MRE, valuation uplift through discovery success, project advancement and de-risking as the BGP progresses towards production. MI6 holds ~$250m cash, sufficient to fund to Final Investment Decision (FID) in early CY27, long-lead items and early site works. We lift our valuation to $1.40/sh and retain our Speculative Buy recommendation.

The post BHP shares may not double in 12 months but this ASX mining share could appeared first on The Motley Fool Australia.

More reading

• I’d buy these 5 ASX dividend investments for retirement income
• These ASX shares could generate $10,000 per year in passive income
• 5 things to watch on the ASX 200 on Thursday
• BHP shares tumble as strike threat hits iron ore giant
• BHP shares slump 13% from their peak: Are the ASX mining shares a buy, sell or hold?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX exchange-traded funds (ETFs) are no longer a niche investment. They’ve become one of the fastest-growing parts of the Australian sharemarket.

Today, around two million Australians invest through ASX ETFs, attracted by their simplicity, low costs and ability to gain instant diversification without having to pick individual shares or hire an expensive fund manager.

And the momentum is only building. According to ASX data, ETF trading activity increased 26% during the last financial year, comfortably outpacing the broader sharemarket, where trading rose 22%.

So, what’s behind the surge, and are there any risks investors should keep in mind?

Why investors love ASX ETFs

The appeal of ASX ETFs is easy to understand. Instead of researching dozens of companies, investors can buy a single ETF and instantly gain exposure to hundreds of shares, bonds or other assets.

Some track the entire Australian sharemarket. Others focus on global shares, technology, healthcare, dividends or specific investment themes.

Fees also tend to be significantly lower than those charged by actively managed funds because most ETFs simply track an index rather than trying to outperform it.

For long-term investors, that combination of diversification, transparency and low costs has proven incredibly attractive.

Many ETFs also pay regular distributions, making them popular with income-focused investors and retirees.

Perhaps most importantly, they’re easy to buy. Investors can purchase ETFs through the ASX in exactly the same way they buy ordinary shares.

The market keeps getting bigger

It’s not just investor numbers that are climbing. The number of ETFs listed on the ASX has more than doubled over the past five years to 456 products. Last financial year alone saw another 72 ASX ETFs launched, according to ASX data.

Meanwhile, funds under management across Australia’s ETF industry have now surpassed $350 billion, highlighting just how quickly the sector has matured.

That’s good news for investors because it provides more choice than ever before. Whether someone wants exposure to Australian blue-chips, US technology giants, emerging markets or fixed income, there’s now likely to be an ASX ETF designed for that purpose.

More choice also means more risk

However, rapid growth brings its own challenges. As investor demand continues rising, fund managers are racing to launch new products targeting the latest investment trends.

Artificial intelligence has become the newest battleground.

Several ASX ETF providers have recently launched AI-focused funds that promise investors exposure to companies expected to benefit from the AI revolution. Examples include the Global X Artificial Intelligence ETF (ASX: GXAI), the Betashares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ) and the VanEck Global Defence ETF (ASX: DFND), which also has meaningful exposure to AI-driven defence technologies.

While thematic ETFs can provide targeted exposure to exciting industries, they often carry higher risks than broad-market index funds. Many hold relatively concentrated portfolios, while others launch after a sector has already experienced a significant rally.

In other words, investors may end up buying into yesterday’s hottest trend rather than tomorrow’s biggest opportunity.

Foolish takeaway

The growth of ASX ETFs reflects a broader shift towards simple, low-cost investing. With two million Australians now using ETFs and more than $350 billion invested in the sector, they have become a mainstream way to build long-term wealth.

But as the number of available products continues to explode, investors should remember that not all ETFs are created equal. Choosing a diversified, well-constructed fund remains just as important as deciding to invest in an ETF in the first place.

The post ASX ETFs are booming. Should you join in? appeared first on The Motley Fool Australia.

More reading

• 3 ASX ETFs to buy and hold for 10 years
• 3 exciting ASX ETFs for exposure to the future of technology
• Own GDX, MOAT, or ESPO? VanEck just announced ASX ETF dividends
• Where to invest $5,000 in ASX ETFs in July
• 3 amazing tech ETFs to buy and hold forever

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.