3 blue chips for your portfolio

Three alternatives to the expensive banks

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Many investors may be looking at the share prices of the banks and wondering where on earth they are going to park their funds as their term deposits mature. Many face putting up very low interest rates, or having to make a decision to invest elsewhere.

With bank share prices looking extremely expensive despite the fully franked dividends, investors are desperately seeking safe, reliable businesses to invest in.

Here's three companies that might not look cheap now, but could leave the S&P/ASX 200 index (Index:^AXJO) (ASX:XJO) in their dust over the next five to ten years.

CSL Limited (ASX:CSL) is currently trading on a trailing P/E ratio of 24.1, but could see growth of around 20% per annum over the next few years. New products developed from blood plasma to treat a host of diseases may be coming to add to the company's existing lineup, along with more sales into developing countries could see sales and profits rise. Add in the company's ongoing share buybacks, and existing shares could be worth multiples of the current price.

Cochlear Limited (ASX:COH) is reportedly facing increased competition from revitalised competitors, as well as Chinese startups. But don't let that fool you. Cochlear develops premium hearing devices and has more products in the pipeline. When it comes to people's health, quality is king, and Cochlear is likely to profit from rising awareness of its products globally.

Telstra Corporation (ASX:TLS) may not be able to grow its mobile or broadband business too much further in Australia. It already has dominant positions in both, and Australia's market is fairly small and growing at a slow rate. But its smaller, unsung divisions such as cloud computing, network applications and data services could see massive growth in the years ahead. Shareholders could see Telstra's legendary dividend significantly higher in ten years' time.

Foolish takeaway

While the banks are unlikely to grow significantly from here, without a big increase in credit growth, these three may be better options for those looking for solid, blue chip companies for their portfolio.

Interested in our #1 dividend-paying stock? Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

More reading

Motley Fool writer/analyst Mike King owns shares in CSL, Cochlear and Telstra.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »