Sydney Airport Holdings Ltd (ASX: SYD), APA Group (ASX: APA) and XERO FPO NZX (ASX: XRO) shares are worthy of a spot on a retirement watch list.
What do you look for?
When we reach retirement we hope that the 'heavy lifting' of our investing is done.
We hope that the investments we made when we were younger have compounded into something we can be proud of. We have reinvested dividends, rental income and/or pushed excess cash into superannuation.
Upon retirement, many people shift their focus from longer-term growth to income. Whether it is a pension from super, releasing our properties from negative gearing, or buying an annuity or term deposit. For personal investments in the share market, we target reliable dividend yields.
The companies which pay these dividends are usually large established blue chips. They have defensive business models with a dominant presence in key markets.
Here are three companies that are worthy of a spot on a retirement watch list.
Sydney Airport
Sydney Airport is the airport in Australia's largest city. The company makes money by charging airlines to land and use its terminals, rental income from shops and car parking. While the Government plans to build a second airport in Western Sydney, there is a significant tailwind behind the existing airport in the form of rising demand from international and domestic visitors. The company is expected to pay a dividend of 4.2%.
APA Group
APA Group may not be a familiar name to many people but if it didn't do what it does, you would soon find yourself being cold and laying in a sleeping bag at night. APA Group owns the biggest chunk of Australia's natural gas pipelines, distribution centres and wind farms. Given the cost of setting up new pipelines and the delay in forming new agreements, APA Group has an enviable business model. The company is expected to pay a 4.3% dividend.
Xero
Xero is different to the companies above. It's unprofitable and does not pay a dividend. However, given that our life expectancies are stretching, forcing more retirees to invest for the long-term and keep their capital growing, adding companies like Xero into the mix of investments is vital. Xero is the accounting software provider taking on Australia and the UK. Although it is not yet profitable, Xero is creating a suite of programs that will change the way most small businesses do business forever.
