With the S&P/ASX 200 (INDEXASX: XJO) Index charging higher, it's becoming more and more difficult to find well-established businesses trading at reasonable prices. Yet we all know just how vital it is to hold such stocks in our portfolio to protect against a market downturn and to provide a steady flow of income in the form of dividends.
As such, I thought it would be appropriate to highlight three blue-chip stocks which I believe are still trading at reasonable prices, and should be held onto over the coming decade to recognise their true potential.
1. The first company I would suggest is Australia's out-of-favour beverage manufacturer Coca-Cola Amatil Ltd (ASX: CCL). The company's profits have come under enormous pressure over the last 12 months due to aggressive competition from Schweppes, margin pressures from the supermarket duopoly and inflationary pressures in Indonesia, which was tipped as being its key growth market.
However, I believe these pressures are largely short term in nature and the company should be able to overcome them to deliver outstanding long-term results. In addition, its strong balance sheet will allow it to continue paying a generous dividend to reward those shareholders who remain patient.
2. BHP Billiton Limited (ASX: BHP) is also worthy of a core position in your portfolio, particularly with its price having dropped more than 7% in a little over a week. While its share price could remain volatile in the near term as a result of falling commodity prices, it is improving productivity and reducing costs to ensure a bright future. At $36.88 a share, it offers a grossed up dividend yield of 5%, which is nothing to be sneezed at in this low interest rate environment.
3. Finally, investors should also consider adding Westfield Corp (ASX: WFD) to their holdings. The company was created as a result of the controversial Westfield restructure, and now owns and operates all international shopping malls (except those in New Zealand). It is in a prime position to benefit from the recovering US and UK economies, particularly with its focus being primarily directed towards its 'Flagship' operations (essentially those located in major cities).
The Motley Fool's #1 Dividend Stock for 2014-15 – FREE!
While each of the companies mentioned above are looking like tasty buys right now, the Motley Fool's top analysts have recently uncovered another stock which not only offers strong growth potential, but also a juicy, fully franked dividend.
