Suggesting to invest in ASX blue chips is one of the most popular pieces of advice for beginners.
Taking advantage of the share market is one of the best ways to grow your wealth over time in my opinion.
Businesses that have the ability to both pay us a solid dividend whilst also keeping some of the profit to re-invest for more growth are attractive.
But which ASX blue chips should you invest in? When you look at the ASX 20 there are plenty of names which you’ve probably heard of like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), BHP Group Ltd (ASX: BHP), Suncorp Group Ltd (ASX: SUN), Telstra Corporation Ltd (ASX: TLS) and Scentre Group (ASX: SCG) – owner of Westfield centres in Australia & New Zealand.
But I don’t think it’s as simple as just picking one of these large businesses and then hoping for the best over the long-term.
I think any business worth investing in needs to have a decent economic moat. That means it’s quite hard for a competitor to steal customers.
I also believe for a business to be able to deliver solid returns over the long-term it needs to have some control over the pricing of its products and services, so that the price isn’t dictated by competitors or customers. I’d also want to find businesses that indirectly benefit from the growing population and/or inflation over time.
I think the above points rule out most of the ASX 20. Resource companies can’t really control the price they receive for their commodities. Scentre Group is at danger from online shopping. The banks face a number of issues and Telstra has lots of low-cost competition.
So, are there any ASX blue chips worth investing in?
There are two ASX blue chips in the ASX 20 that I definitely think are worth thinking about. CSL Limited (ASX: CSL) and Macquarie Group Ltd (ASX: MQG) are high-quality global businesses with good earning power. You could also probably throw Transurban Group (ASX: TCL) into that description with how regularly it can increase toll road prices.
But then valuation becomes a problem. Investors recognise quality and have sent the share prices of CSL and Transurban very high, perhaps too high. But if you look hard enough at slightly smaller businesses, there are some market leaders that display the right characteristics for a good investing price.
Like these top blue chips that could be the right fit for most portfolios.
Want to find ASX shares that offer both income and growth? 3 Of The Best Blue Chips On The ASX Are Revealed For Free Here
You’re invited! For a limited time, The Motley Fool Australia is giving away an urgent new investment report detailing our 3 TOP BLUE CHIP SHARES to own in 2019.
So if you like trustworthy, stable, high-performing companies that pay fat fully franked dividends – we’ve got you covered!
Stock #1 is a beloved old Australian company turning its attention to high-margin businesses... and rapidly returning cash to shareholders with its hefty dividend...
While Stock #2 is an online powerhouse that’s rapidly gaining market share all around the globe... poised for years (or even decades) of tremendous growth...
Even better, Stock #3 offers a whopping 6.5% grossed-up dividend! Which beats the rates on term deposits right out of the water – and offers the potential for capital gains, too.
You can discover all three shares inside our new report right now. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a LIMITED TIME ONLY!
- NEW: Free report names top 3 ASX dividend shares to buy for 2019
- Top analysts name their top 3 ASX blue chip shares for 2019
- Richest man alive issues dire warning
- 3 quality dividend shares to boost your income
Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Telstra Limited, and Transurban Group. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019