3 ASX dividend stocks I own to pay for my retirement (2024)

I love the cash these shares are sending to me every year.

One of the easiest ways to receive passive income is with quality ASX dividend stocks. I own several names in my portfolio that I'm hoping will generate the cash flow I need in retirement, whenever that is. In this article, I'm going to talk about three of my favourite names.

Ideally, I want to see the payouts of my investments grow faster than inflation over time to ensure my retirement income doesn't lose its buying power. Capital growth would also be useful, though I don't expect it to happen every single year – that's just how the ASX share market works.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Pattinson is one of my favourite ASX dividend stocks because of the long-term stability and growth it has achieved through its diversified portfolio.

The investment company is invested in a number of sectors like telecommunications, resources, swimming schools, agriculture and property.

Every year it receives investment income from its portfolio, pays its expenses, declares a bigger dividend for shareholders and re-invests the remaining cash flow into more assets for growth next year (and beyond).

Soul Pattinson has grown its dividend every year since 2000 – it's not guaranteed to keep growing the dividend, but there is a clear intention by the board to do so. That's why I think it's a great ASX dividend stock for retirement, even if the grossed-up dividend yield is only 3.7%.

Rural Funds Group (ASX: RFF)

I think farmland is one of the most important real estate classes in Australia and the world with the growing human population – we all need to eat.

Rural Funds is a real estate investment trust (REIT) that owns a variety of farmland including cattle, almonds, macadamias, vineyards and cropping.

I like the idea of having exposure to farmland, but I don't want the hassle that comes with owning commercial property (like dealing with tenants and paying the invoices) – Rural Funds gives me a way to do that.

The ASX dividend stock pays a quarterly distribution to investors. Higher interest rates have hurt the Rural Funds share price, but I think the lower share price reflects the new economic environment.

Based on the forecast distribution for FY24, the forward distribution yield is 6.2%.

Bailador Technology Investments Ltd (ASX: BTI)

This is a business that invests in unlisted technology businesses that are typically two to six years old, which are run by founders and have a "huge market opportunity". Bailador only looks at businesses with a "proven business model with attractive unit economics", have "international revenue generation" and the "ability to generate repeat revenue".

It's invested in a few different businesses including Siteminder Ltd (ASX: SDR), Rezdy, Access Telehealth and Rosterfy. It has been invested in Siteminder for so long that it grew and listed onto the ASX.

Rezdy is an online channel manager and booking software platform for tours and activities. Access Telehealth is a telehealth platform that's "connecting Australian communities to high-quality healthcare." Rosterfy offers volunteer management software that "connects communities to events and causes".

Despite the interest rate difficulties, the ASX dividend stock's portfolio return post-tax has been an average of 11.6% per annum over the last three years. The business aims to pay a dividend yield of 4% of its pre-tax net tangible assets (NTA), or 5.7% grossed-up.

However, the grossed-up dividend yield would be 7.7% based on the October NTA because the Bailador share price is valued at a 26% discount to the pre-tax NTA (and a 21% discount to the post-tax NTA).