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3 large-cap stocks for defensive investors

Investing in the large companies has its advantages. They may offer stable growth and attractive dividends for steadier investment returns.

As market-leading businesses in their industries, they have enough finances to do large investments, projects and acquisitions. That keeps business opportunities flowing. Also, they usually have strong balance sheets to help protect against hard times.

When you are looking for more predictable returns and decent share price appreciation, they may be the solution.

Australia & New Zealand Banking Group Ltd (ASX: ANZ) is one of the big four banks with a market capitalisation around $88.5 billion. Its shareholders enjoy a 5.08% dividend yield and since 2009 total annual dividends have increased from 102 cents per share to 164 cps.

Its name is well known domestically and the company is expanding into Asia, where it sees great potential growth. With the financial strength of China and other developing nations growing in the region, the bank wants to tap into Asia’s expanding wealth.

Wesfarmers Limited (ASX: WES) offers exposure to retailing through Coles supermarkets, Bunnings Warehouse, K-mart and Target stores. It has a 4.32% dividend yield. Its total shareholder return for the past 10 years was an average annual 10.2%.

It is selling its insurance underwriting business to Insurance Australia Group Limited (ASX: IAG) for $1.85 billion. In addition, it is considering floating its insurance broking business. These two actions would bring in funds that it can use for growing its retail business, where the majority of revenue and earnings come from.

Telstra Corporation Ltd (ASX: TLS), the telecommunications giant, is transforming itself into a digital entertainment and telecom market leader. It is expanding its mobile and cloud services and owns 50% in Foxtel along with Twenty-First Century Fox Inc. (ASX: FOX).

Its dividend yield is 5.56%. It has paid a solid 28 cents per share in total annual dividends for the past seven years. In the first half of FY2014, it raised the interim dividend to 14.5 cents per share.

It is expanding into Asia and working with local digital and telecom service providers in the region to increase its business network.

Foolish takeaway

Large-cap companies are stalwarts that can help your portfolio from riding a rollercoaster of up and down returns. They are mature businesses with stable dividends, usually rising each year along with the share price.

If you have smaller, more volatile stocks, these can possibly balance out and diversify your portfolio.

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Motley Fool contributor Darryl Date Shappard has no financial interest in any company mentioned. 

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