While exciting tech shares like Altium Limited (ASX: ALU) are great to have in some portfolios, these types of shares are largely unsuitable for retirees that aim to preserve wealth and generate income.
I think the best shares for retirement portfolios are the ones that you can put in the bottom drawer and collect dividends from every six months.
Three shares that tick a lot of boxes for me in this regard are listed below. Here's why I like them:
Dicker Data Ltd (ASX: DDR)
Thanks to its robust business model and talented management team, this computer software and hardware wholesale distributor has provided investors with a stunning average total return of 38% per annum over the last five years. While I wouldn't necessarily expect a return of that nature over the next five years, I think the combination of share price appreciation and its generous dividend policy could lead to market-beating returns. This year the company intends to pay an annual fully franked dividend of 18 cents per share in quarterly instalments. This is a yield of 6.1% yield based on its current share price.
Rural Funds Group (ASX: RFF)
As the name implies, Rural Funds is a real estate investment trust with a focus on agriculture assets. The trust owns 38 properties across six different agricultural sectors including poultry, cattle, and grape production. On average the tenancies on its assets have 12.5 year to run, giving investors great visibility on its long-term earnings potential. Especially given how rental indexation has been built into its rental contracts. Rural Funds' shares currently offer a trailing yield of 4.9%.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
While I do have concerns that Sydney Airport could be classed as a bond proxy and dragged lower when bond yields widen, I remain optimistic that its solid growth prospects will keep investors interested and prevent a selloff. This is because Australia is in the middle of a tourism boom for both inbound and outbound travel. So with more and more passengers passing through its gates, I expect solid increases in revenue from airport fees, car parking, and rents from its retail facilities. Sydney Airport's shares currently offer an unfranked 5.1% distribution.
