The blue chip portfolio that’s jumped 20% higher in 2012


The ASX is on the rise, recently closing at a 3-month high. But, our 4 top stocks for 2012 have done far better, jumping over 20%.

Yes, markets can be resilient, until they’re not. Like night follows day, every few months a bout of panic comes over investors and like lemmings, they all head for the exits at precisely the same time.

We Fools are neither worried nor fazed by stock market volatility. It comes with the territory. On the contrary, it can present some wonderful opportunities.

Two bank stocks I sold…

When shares rise, they give us an opportunity to sell, just as I did last week, taking some more profits on long-held family positions in Commonwealth Bank (ASX: CBA) and ANZ (ASX: ANZ).

Lo and behold, today I read with interest of UBS saying in The Australian Financial Review that valuations on some defensive yield plays may be stretched.

According to the AFR, UBS told clients that the banks’ weighting in the ASX 200 “has hit a record high at 28%. Given the subdued earnings growth outlook we believe banks now look expensive.”

I hope it’s a case of great minds think alike, although even if the share prices of the big four banks kept on rising and rising, I wouldn’t be disappointed. Just like it’s impossible to buy at the bottom, it’s impossible to sell at the top of the market.

The dash for yield is on in earnest. Australian investors have been a little behind the curve, largely because we can earn 5% by leaving our cash in the bank, but in recent weeks and months, high-yielding shares have consistently been making 52-week highs.

Telstra at $4

The daddy of them all is Telstra (ASX: TLS) — the dog of a stock no-one wanted to know a year ago when we named it as our number one ASX 20 pick, at the time saying it provided excellent cash returns, limited downside and reasonable upside potential.

It’s clearly been a great call, with Telstra shares soaring 34%, plus investors have pocketed 28 cents in dividends. This compares to the S&P/ASX 200 Index that has fallen 3.7% over the past 12 months.

Speaking of Telstra, yesterday we received an email from a Motley Fool Share Advisor subscriber…

“Looking at Telstra share price this year, and there seems no end in sight in its trajectory. Do you rate it a buy?”

We can’t give individual investing advice, but we can say…

“Unfortunately, the time to get excited by Telstra was probably closer to $3 than $4. It’s still a reasonable buy for those looking for income and/or a less volatile portfolio, but much of the share price appreciation has likely already happened – for now anyway. Of course, who knows what the market will do in the short-medium term, but it’s closer to ‘reasonably valued’ than ‘attractively valued’ in our book.”

On fire: Scott Phillips’ top 4 blue chips

We’ve seen it time and again. Investors love to chase the hot stocks of the day, and these days, that means high yielders like Telstra, Commonwealth Bank, Woolworths (ASX: WOW) and Coca-Cola Amatil (ASX: CCL) trading at our near 52-week highs.

Speaking of Coca-Cola Amatil, it was one of the quartet of companies Motley Fool Share Advisor Analyst Scott Phillips named in January as his Top 4 Blue Chip Stock Picks for 2012. The other 3 stocks were Telstra, QBE Insurance (ASX: QBE) and Westfield (ASX: WDC).

As of today, Scott’s “top stock portfolio” has returned a capital gain of 18.6%, a truly stunning performance in just 7 months.

Including dividends, the story gets even better, the total return jumping to 21.1%, well ahead of the All Ordinaries index dividend adjusted return of 5.4%.

We’re not claiming any sort of victory yet – investing is a marathon, and with a multi-decade time horizon, seven months is more of a sprint. That said, the dividends are real enough, and we’ll happily take the price gains over the alternative.

If you’re in the market for some high yielding ASX shares, look no further than our ”Secure Your Future with 3 Rock-Solid Dividend Stocks” report. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

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Bruce Jackson has an interest in Commonwealth Bank, ANZ, Telstra and Woolworths. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is 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. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691).

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