Generally, as we get older our priorities changes and, therefore, so do our investment goals. When you first start out investing you might seek the high risk, high reward gains from burgeoning growth shares. But as you enter retirement, these types of investments take a backseat as you look for income and capital preservation.
I feel the following three shares are worthy of consideration for any potential retiree's portfolio:
Telstra Corporation Ltd (ASX: TLS)
The inclusion of this telecommunication behemoth will come as little surprise to readers. But there's a good reason for that. In my opinion, no matter how technology evolves in Australia in the future, Telstra will be leading the pack.
Although it faces stiff competition from the likes of TPG Telecom Ltd (ASX: TPM) and Vocus Communications Limited (ASX: VOC), I believe the financial strength of the company gives it an edge over the competition. Additionally, its investments outside of its core segment in businesses such as PacNet and Ooyala could help offset any declines in revenue related to the demise of the fixed-line telephone.
By being able to sustain its market-leading position, it should also allow it to continue to pay a strong and growing dividend. Telstra has not cut its dividend in almost 10 years, and considering the healthy $2.1 billion half-year profit recently, I feel the estimated 31.5 cents dividend for fiscal 2016 is looking secure.
There may be ups and downs along the way, but I still expect Telstra to be paying a strong dividend in 10 years' time.
Wesfarmers Ltd (ASX: WES)
Despite the fact that Aldi is trying to ruin the party of Wesfarmers-operated Coles and Woolworths Limited (ASX: WOW), I still feel the former is in a strong position.
Let's not forget that Wesfarmers is so much more than just Coles. Its portfolio of brands includes Kmart, Target, Bunnings, and Officeworks. All of which are turning in solid performances currently after a few blips.
The company's foray into the UK hardware market through its acquisition of Homebase has definitely rattled the market following Woolworths' failure domestically with its Masters brand. If management gets it wrong it could be an extremely costly venture, but I have high hopes that the Bunnings business model will translate well into the UK market.
Like Telstra, Wesfarmers pays a strong dividend. Analysts are estimating it to grow from 205.4 cents per share in 2016, to 220 cents per share in 2017, all the way up to 249.7 cents per share in 2017.
If this level of growth can be sustained, I believe it could become a key part of many retirees' portfolios.
Westpac Banking Corp (ASX: WBC)
Australia's oldest bank has been around for almost 200 years, and I expect it will remain with us for some time yet. This pick was neck and neck with Commonwealth Bank of Australia (ASX: CBA), but by virtue of offering a greater dividend at present, I opted for Westpac.
Nobody quite knows what the future of banking will look like. There has been a lot of talk of Bitcoin and Blockchain shaking up the industry. Well, the good news is that if this is the case then Westpac is in the driving seat thanks to being part of a consortium which is developing a new Blockchain framework for financial institutions.
Banking shares are cyclical by nature, and I would fully expect a lot of ups and downs for the share price in the next decade. But one thing I do expect to remain constant, is the great dividend it pays. I believe that this should provide retirees with a consistent and predictable income stream.
Foolish takeaway
I believe these three shares offer retirees strong, consistent, and growing dividends. When investing for income you could be tempted by companies such as BHP Billiton Limited (ASX: BHP), which pays dividends. But due to the high levels of volatility in commodity markets, I personally feel it is not well suited for the average portfolio of a retiree.
