Creating a portfolio for retirement income is not focused on pursuing the highest possible yield. Instead, it involves assembling a combination of dependable dividends, diversification, and sufficient growth to outpace inflation.

If I were constructing a $100,000 retirement income portfolio on the ASX today, I would combine three high-quality dividend-paying stocks with two exchange-traded funds (ETFs).

Here is the strategy I would implement.

Dependable Earnings and Distributions

I would begin by investing $25,000 in APA Group Ltd (ASX: APA). This infrastructure leader currently provides a dividend yield of approximately 6.1%, supported by essential gas pipeline and electricity assets that produce long-term, contracted cash flow. This level of reliability is perfect for retirees looking for a steady income stream.

Next, I would allocate $20,000 to ANZ Group Holdings Ltd (ASX: ANZ). Although the yield is slightly under 5%, at around 4.5%, the partially franked dividend and robust banking earnings continue to make it a very appealing choice for income-focused investors. Banks are among the most consistent dividend payers on the ASX.

For a third individual stock holding, I would invest $15,000 in Transurban Group (ASX: TCL). Similar to APA, it owns unique infrastructure assets, specifically toll roads in Sydney, Melbourne, and North America. Revenue linked to traffic volumes includes inflation-adjustment mechanisms over time, which can help maintain purchasing power during retirement.

High-Yield Blue-Chip Stocks and Bonds

Now, for the ETF portion of the retirement portfolio.

I would assign $25,000 to the Vanguard Australian Shares High Yield ETF (ASX: VHY). This ETF offers immediate diversification into a collection of Australia's highest-yielding blue-chip companies, including banks, miners, and telecommunications firms. It mitigates the risk associated with any single stock while maintaining a strong emphasis on income generation.

The final $15,000 would be placed into the Vanguard Australian Fixed Interest ETF (ASX: VAF). Bonds may not be the most exciting investment, but they contribute portfolio stability and help reduce volatility during periods of equity market turbulence.

This combination results in a portfolio with 60% in direct, high-quality dividend shares, 25% in diversified high-yield equities, and 15% in defensive bonds. It has the potential to generate an overall yield between approximately 5.3% and 5.8%, alongside substantial access to franking credits and inflation-linked infrastructure assets.

For a $100,000 portfolio, this could translate to an annual cash income of $5,300 to $5,800, before considering any potential growth in dividends.

Key Insight

The most appealing aspect of this portfolio structure is its balance.

APA and Transurban offer the resilience characteristic of infrastructure assets, while ANZ contributes partially franked banking income. The Vanguard high-yield ETF provides broad market exposure, and the fixed interest ETF helps lower sequence risk, a factor that becomes critically important once you start drawing a regular income in retirement.

For an Australian retiree, this is a type of portfolio designed to generate income today without compromising long-term sustainability.