When it comes to building a successful retirement portfolio I believe investors should avoid speculative high-risk shares and focus solely on high-quality shares with strong core businesses that will still be around in 30 years.
Companies with strong competitive advantages and a track record of growing their dividends would definitely be part of my retirement portfolio. Fortunately for Australian investors there are a number of shares on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) which I believe fit these criteria.
Here are three shares from different sectors which I think retirees should consider buying today:
Ramsay Health Care Limited (ASX: RHC)
I believe this private hospital operator is the best healthcare share on the ASX and would make a great addition to a retirement portfolio today.
Management stated in a recent presentation that it sees demand for hospital care services continuing to grow thanks to ageing populations, increased chronic disease burden, and improvements in treatment and diagnostic methods. As it has 221 hospitals across six countries, 25,000 beds, and 50 years of experience in the industry, I feel Ramsay Health Care is positioned perfectly for long-term growth.
Although its shares only provide a fully franked 1.5% dividend at present, the company has grown its dividend by over 17% per annum for the last 10 years. Due to its strong growth potential I expect this to continue for some time to come, making it a great combination of growth and income in my opinion.
Transurban Group (ASX: TCL)
Whilst its shares do not come cheap, Transurban Group is the blue-chip king in my opinion. The toll road giant has the rights to operate a number of vital toll roads in Australia for at least the next two decades. This puts the company in an incredibly commanding position, especially as Australia's population increases and its roads get even more congested.
As a result I expect earnings to grow at a solid rate for the foreseeable future which should help support its growing dividend. After seven successive years of dividend increases Transurban Group shares are expected to provide a partially franked 3.7% dividend in FY 2017 according to CommSec.
Investors could wait in hope for a pull back before investing, but if you plan on holding Transurban Group for the next decade or so, then I believe investing today at the current price will prove to be a rewarding investment.
Telstra Corporation Ltd (ASX: TLS)
In the current low interest environment I believe Telstra is a great option for retirees. At the current share price it is one of the more generous dividend payers on the S&P/ASX 200 with an estimated full year fully franked dividend of 5.3%. This is around 110 basis points higher than the market's average of 4.2%.
The good news is that this dividend appears to be more than sustainable thanks to the solid performance of its core businesses. In its half year results the company reported that it added an additional 121,000 retail fixed broadband customers and an impressive 235,000 net new retail mobile customers. This helped boost half-year profit to a massive $2.1 billion.
The growth of its core businesses may now be slowing, but there's still a lot of potential in other areas of the business. As well as its expansion into the Asia-Pacific region, I'm very optimistic about Telstra expanding its presence in the healthcare sector.
The company has been building out capabilities for providing solutions in numerous areas including primary, aged and residential care, hospitals, radiology, pharmacy, and health analytics. Rather promisingly it recently secured a $180 million three-year contract from the government to manage a new national cancer screening register from next year.
