At long last there are a lot of different options for retirees that live off passive income payments thanks to higher interest rates.
However, while financial assets like term deposits and savings accounts are good options, I would argue that dividend-paying ASX shares remain king.
After all, the dividend yields on offer from some ASX shares are vastly superior to term deposits.
In addition, term deposits don't offer capital gain potential. Whereas it is possible to earn big yields and grow your original investment with ASX shares.
And while it is worth remembering that shares do carry risks, unlike term deposits or savings accounts, by investing carefully, investors can reduce their risk.
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Which ASX shares could offer steady passive income?
The first ASX share that could be worth considering is Coles Group Ltd (ASX: COL).
As we saw during the pandemic, supermarkets are about as defensive as it gets and can thrive no matter what is happening in the economy.
This could make Coles a top option for retirees who are looking for a growing source of passive income.
Citi appears to believe it would be. It currently has a buy rating and a $17.50 price target on its shares. This implies a potential upside of 10% for investors over the next 12 months.
In addition, it is forecasting fully franked dividends per share of 64 cents in FY 2024, 70 cents in FY 2025, and then 79 cents in FY 2026. This equates to dividend yields of 4%, 4.4%, and 5%, respectively.
Another ASX share that could be a good pick is Telstra Group Ltd (ASX: TLS).
As with Coles, Telstra has the sort of defensive qualities that you would want in a retirement portfolio.
It is also forecast to provide a growing passive income stream in the coming years by analysts at Goldman Sachs.
The broker is forecasting fully franked dividends per share of 18 cents in FY 2024, 19 cents in FY 2025, and then 20 cents in FY 2026. If Goldman is on the money with its estimates, this would mean dividend yields of 4.5%, 4.8%, and 5%, respectively.
Its analysts also see plenty of upside for Telstra's shares. Their buy rating and $4.70 price target suggest that they could rise almost 19%.
