For many Aussies, retirement marks the culmination of a lifetime of saving and investing. With a nest egg built, the focus shifts to generating a steady income stream while preserving capital. High-yield ASX shares can be a cornerstone of this strategy, offering the potential for both passive income and long-term growth.
While chasing maximum dividend yields might be tempting, building a diversified portfolio of companies that can sustain and grow their dividends over time is often a wiser approach. Let's explore three ASX shares that could be strong contenders for Aussie retirees seeking a balance of income and growth.
1. Nick Scali Limited (ASX: NCK)
Nick Scali Limited is a furniture retailer known for its high-quality products and strong market presence in Australia and New Zealand. This company has demonstrated robust financial performance, consistently generating substantial profits, which supports its ability to pay dividends.
Nick Scali's dividend yield is appealing for retirees looking for reliable income. As of the latest figures, NCK offers a dividend yield of approximately 6.5%. The company's strong earnings and careful management are what sustain this high yield.
One of the key attractions of Nick Scali is its resilient business model. Even during economic downturns, the demand for furniture remains relatively stable, ensuring a steady stream of revenue. Furthermore, the company has a history of increasing dividends, providing retirees with not just a consistent income but also the potential for income growth over time.
2. Premier Investments Limited (ASX: PMV)
Premier Investments operates various specialty retail fashion chains in Australia, New Zealand, Asia, and Europe. This diversified portfolio of brands includes well-known names like Smiggle, Peter Alexander, and Just Jeans.
Premier Investments boasts a flawless balance sheet, making it a reliable dividend payer. Currently, the company is trading at 40.1% below the estimate of its fair value, indicating potential for capital growth in addition to dividend income. Although it does not have the highest dividend yield, PMV's 4.1% yield is supported by a solid financial base and a track record of reliably paying dividends.
The company's diversified revenue streams and solid financial health make it a safe bet for retirees seeking stability and growth. With a strategic focus on expanding its brands internationally, Premier Investments has the potential to enhance its profitability, thereby increasing its dividend payouts in the future.
3. Charter Hall Long WALE REIT (ASX: CLW)
This high-yield ASX share is a real estate investment trust (REIT) that owns a variety of properties across different sectors, including distribution centres, pubs and bottle shops, telecommunication exchanges, and service stations. What links all of these properties together is that they have signed long rental contracts with tenants.
At December 31, 2023, the business had a portfolio-weighted average lease expiry (WALE) of 10.8 years, giving investors plenty of visibility about the rental outlook. Commercial property can be a good source of passive income. The rent steadily grows, with some contracts having rental increases linked to inflation and others with a fixed annual increase. However, higher debt costs are a short-term headwind for earnings and distributions.
In FY24, the high-yield ASX share is expected to pay a distribution per security of 26 cents, which is a distribution yield of 7.6%. This makes Charter Hall Long WALE REIT an attractive option for retirees looking for reliable and growing income streams.
For retirees seeking a dependable income stream with the potential for growth, a well-diversified portfolio of high-yield ASX shares can be a strategic choice. Nick Scali Limited, Premier Investments Limited, and Charter Hall Long WALE REIT exemplify companies that offer a compelling mix of dividend yield and growth prospects. While no investment is without risk, these companies' robust financial positions provide a degree of confidence for retirees seeking to enhance their retirement lifestyle.
By incorporating these stocks into a broader investment strategy, retirees can work towards achieving their financial goals while enjoying the peace of mind that comes from a steady income stream.
