Are you currently retired and looking for some extra income?
In my view, shares are a much better alternative than keep your money in a so-called 'high' interest savings account or term deposit, where you are going to get less than 2% interest per annum, which doesn't even cover inflation!
So here are 3 of my top picks for income shares: Telstra Corporation Ltd (ASX: TLS), Wesfarmers Ltd (ASX: WES) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).
All 3 are quality blue-chip ASX 100 shares, with established and entrenched market positions and proven and diversified business models. All pay good dividends which are fully franked, meaning that you get a 30% tax rebate on top of the dividend.
I do have to point out, however, that even top quality blue-chip shares can fluctuate in the short term, so when purchasing shares for retirement I recommend holding them for at least 5 years. This will help you ride out any volatility in the market.
Telstra
Telstra is Australia's largest telecommunications provider, and has held the number 1 position in Australia's telco market for many decades.
It has been undergoing some recent short-term pain as it restructures into a leaner company, as Australia's National Broadband Network (NBN) continues to be rolled out.
However, I believe that this strategy will position it well to remain in the number 1 market position and more effectively compete with the growing competition in the fixed broadband market.
Telstra pays an attractive fully franked dividend of 3.5%.
Wesfarmers
Wesfarmers has operations in general retail segments including home improvement, general merchandise and office supplies, as well as industrial segments with operation including chemicals and energy. Some of Wesfarmers' subsidiaries are household names such as Bunnings Warehouse, Kmart Australia and Officeworks.
What really attracts me to Wesfarmers as a long-term investment is that it is a highly diversified business, providing a buffer to any industry-specific challenges.
Wesfarmers pays out an appealing dividend yield of around 3.7% that is fully franked.
Soul Patts
Washington H. Soul Pattinson and Co. Ltd, or 'Soul Patts' as it is commonly known, has market exposure to a broad range of industries, including pharmacies, telecommunications, mining and building products.
It has an excellent long-term track record of outperforming the ASX index and I believe that this trend is set to continue over the next decade.
Soul Patts has been listed on the ASX for over a century and has paid a dividend every year during that time.
It currently pays a fully franked dividend yield of around 2.7%.
