In the long run the stock market goes up. It?s a simple and true statement but something which investors could be forgiven for forgetting given the day-in-day-out predictions by some market commentators of booms and busts and meaningless analysis of the intraday movements in the market.
Investors who block out this market noise and do one other very important thing ? avoid losers ? have a very good chance of enhancing their wealth over the long term by owning a portfolio which rises with the stock market (and hopefully a little quicker!)
While no stock is a good investment at any…
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In the long run the stock market goes up. It’s a simple and true statement but something which investors could be forgiven for forgetting given the day-in-day-out predictions by some market commentators of booms and busts and meaningless analysis of the intraday movements in the market.
Investors who block out this market noise and do one other very important thing – avoid losers – have a very good chance of enhancing their wealth over the long term by owning a portfolio which rises with the stock market (and hopefully a little quicker!)
While no stock is a good investment at any price, at the right price the following defensive stocks with their large, entrenched market positions and potential for future earnings growth are worthy additions to many investors’ portfolios.
1) Brambles Limited (ASX: BXB) – The beauty of Brambles is the economies of scale the company enjoys as it adds more customers to its pool. With a revenue base spread across the globe and a value proposition which is appealing to customers, there is good reason to expect that Brambles will not only be able to defend its current market position but also continue to grow its market share, revenue and earnings into the future.
2) Origin Energy Limited (ASX: ORG) – The integrated energy company provides shareholders with exposure to many links along the energy chains. While many things about the future are unpredictable, the likelihood that Origin will continue to be a major provider of Australia’s energy requirements is strong. The entrenched customer base of Origin’s retail division is appealing, and the company’s electricity generation and natural gas production assets provide shareholders with strategic assets that hold much future promise.
3) Wesfarmers Ltd (ASX: WES) – As one of Australia’s only listed conglomerates, Wesfarmers has a business model focused on creating a strong, sustainable and diversified earnings base. While exposure to certain industries, particularly insurance, is declining thanks to the recent announcement that Wesfarmers will offload the division to Insurance Australia Group Limited (ASX: IAG.). Wesfarmers still owns some of Australia’s best retailers including Bunnings and Coles. It has also carved out a niche in the Industrial and Safety market, and its exposure to low-cost coal production provides a diversity of earnings which is hard to match by any other company.
4) Woolworths Limited (ASX: WOW) – When it comes to the right way to ‘do retail’, Woolworths would appear to almost have written the book. With supermarkets, discount department stores, liquor stores and hotels in its portfolio of assets, the company captures a significant proportion of weekly spend from families across Australia. While online shopping is changing the face of retailing, Woolworths is tackling the challenge head-on and there is little reason to suspect that Woolworths won’t continue to grow and demand a significant share of household consumption in the future.
These four blue chip stocks provide investors with exposure to a wide cross-section of industries, which is important for any retirement portfolio. A diversified and defensive portfolio which yields a reasonable dividend and also offers capital growth should be the aim of many retirees.
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Motley Fool contributor Tim McArthur owns shares in Origin Energy.