I’m many, many years away from retiring but I do like to think about what shares I would own if I were retired.
I wouldn’t want to invest in high-risk shares that could mean severe capital losses. All shares are somewhat riskier, but there are some that would be very speculative to own.
If I could pick a group of shares for a retired-Tristan portfolio, then these would be on the shortlist:
National Storage REIT (ASX: NSR)
A lot of retirees would have lived their lives with the idea that real estate is the best investment. National Storage could be the best proxy for growing property prices in two different ways.
Firstly, the amount that National Storage can charge for one of its self-storage units has risen because the residential and commercial rental prices have increased as well, mainly due to the capital value increase. Plus, demand for National Storage’s units is increasing because owning another bedroom for storage in a house is simply uneconomical.
National Storage currently has a trailing distribution yield of 5.9%.
WAM Capital Limited (ASX: WAM)
The WAM listed investment companies (LICs) are perfectly set up for retirees because they pay out most of their market-beating performance as a growing fully franked dividend.
WAM Capital is the mothership of the other WAM LICs, it’s the largest and oldest. The WAM investment process works well for retirees because if the investment team can’t see an opportunity then the team are happy to sit in cash. This is good for capital protection in-particular, but also for opportunities.
Assuming WAM Capital pays another 7.75 cents per share at its annual result it has a grossed-up dividend yield of 9.3%.
Challenger Ltd (ASX: CGF)
There is a growing pool of retirees who are transferring their capital into an annuity, provided by Challenger. This is safe, but I think retirees still need to look for growth. It could be an idea to just invest in the annuity-provider and hopefully get growing income and share price gains.
The number of over-65s is projected to increase by 75% over the next 20 years, which could be a big boost for Challenger’s long-term profit.
Challenger currently has a grossed-up dividend yield of 4%.
I’d be happy for a good portion of my portfolio to be allocated to the above three shares as a retiree. The operating earnings of National Storage and Challenger are likely to keep increasing, whilst WAM Capital has proven to be a top performer for shareholders.