If you're in search of a source of income in retirement, then I think the share market is a great place to look.
Especially given how low the interest rates on offer with traditional income-generating assets have fallen.
Three dividend shares that I think would be great options for retirees are listed below. Here's why I like them:
Coles Group Ltd (ASX: COL)
This supermarket giant has been a very strong performer during the pandemic. This is due to panic buying from consumers, increasing consumption at home, and the pricing power the growing demand has given supermarkets. And while it has incurred additional costs because of social distancing initiatives and increased staffing, I still believe a strong profit result is coming in August. This should put Coles in a position to increase its dividend nicely for shareholders. Looking ahead, I believe the future is bright thanks to its strong market position, cost cutting plans, focus on automation, and long track record of same store sales growth. Based on the current Coles share price, I estimate that its shares offer a fully franked 3.5% FY 2021 dividend yield.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
Another option for income investors to consider buying is the Vanguard Australian Shares High Yield ETF. As its name implies, this exchange traded fund gives investors exposure to many of the highest yielding dividend shares that the Australian share market has to offer. And this is all done through just a single investment. The fund is invested 66 shares in total. This includes the likes of BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four, and telco giant Telstra Corporation Ltd (ASX: TLS). Estimating the yield for next year is tricky at present, but I would expect it to be in the region of ~5% in FY 2021.
