Certain ASX shares could be very appealing options for retirement income because of the sectors they operate in and the likelihood of future operational success.
The two businesses I'll highlight have important roles in Australia's economy. This enables them to generate fairly consistent profitability.
I'm a fan of both these S&P/ASX 200 Index (ASX: XJO) shares, as they are among the leaders in their respective fields. This helps them deliver pleasing profit margins and pay solid yields, which could be pleasing for retirement income.
Wesfarmers is one of Australia's leading retailers because it owns Bunnings, Kmart, Officeworks and Priceline.
I'd describe Bunnings and Kmart as category leaders. I think they've shown over the last six years that they are capable of growing sales and earnings in all economic conditions.
Households are always on the lookout for good-quality products at good prices. Kmart and Bunnings have built a reputation on cost leadership for customers. I think they have increased their market share during this period of a high cost of living.
As an example of its impressive performance, in the FY25 half-year result, the business reported net profit growth of 2.9% to $1.47 billion, helping fund a 4.4% increase of the interim dividend per share to 95 cents per share.
The business has increased its annual dividend per share each year in the last four years following the demerger of Coles Group Ltd (ASX: COL). Broker UBS forecasts the annual dividend payout could increase each year between FY25 to FY29.
At the current Wesfarmers share price, it could pay a grossed-up dividend yield of 4%, including franking credits, in FY26. I think that's a solid starting point for retirement income.
This is a real estate investment trust (REIT) that owns a portfolio of properties from a variety of sectors including service stations, telecommunication exchanges, pubs and hotels, government-tenanted office buildings, grocery and distribution centres, food manufacturing, waste and recycling, and so on.
What ties all these properties together is that Charter Hall Long WALE REIT signs on the tenants for long-term leases. The business had a weighted average lease expiry (WALE) of 9.7 years when it announced its FY25 first-half result, implying it has almost a decade of rental income and visibility.
Pleasingly, it had an occupancy rate of 99.8% in the HY25 result, demonstrating how it's maximising its rental income from its property portfolio.
The business is seeing regular rental income, through both fixed annual increases and inflation-linked reviews. Its weighted average rental review (WARR) in the HY25 result was 3.1%.
It rewards investors by typically paying out 100% of its rental profits each year. Its FY25 distribution equates to a distribution yield of 6.1%. I'd say that's a very pleasing level of retirement income.
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