As the S&P/ASX 200 (INDEXASX: XJO) climbs higher and higher, it's growing increasingly important to maintain a diversified portfolio. Regularly assessing your portfolio's weighting in certain stocks, industries or cash is crucial.
I was recently asked by a family member, who has come into a large sum of money, if it would be wise to invest all of her money in the Australian stock market. With interest rates low and inflation 3%, you'll agree it's a fair question to ask.
However, I don't believe there'll ever be suitable time to advise anyone to invest 100% of their money into just one asset class. Benjamin Graham, often considered the father of value investing, believed a 50-50 split between bonds and stocks was appropriate for most investors.
When an investor felt the market was over or under-valued the split could expand out to 75% ownership of either asset class. With that in mind, here are five ASX stocks you could consider owning as part of your diversified investment portfolio.
- Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is a listed holding company. Its 100 plus years in existence are testament to the benefits of having diversified operations. Many financial commentators often suggest WHSP could be the Australian version of Warren Buffett's own Berkshire Hathaway.
- Slater & Gordon Limited (ASX: SGH) is a law firm specialising in personal injury. However, it has recently expanded into the larger UK market, with much success. Despite a strong run-up in share price over recent years, the long term is looking increasingly bright for this mid-cap legal eagle.
- Woodside Petroleum Limited (ASX: WPL) is our largest independent oil and gas company with a majority of producing assets off the coast of Western Australia. In the coming year Woodside is expected to grow earnings per share and pay a generous fully franked dividend. Forecast to be better than the big banks!
- Collins Foods Ltd (ASX: CKF) is the owner and operator of a portfolio of KFC and Sizzler restaurants. Thanks to acquisitions and ongoing organic growth, the company is expected to post a strong profit result in FY15. Analysts are forecasting a 5% fully franked dividend.
- Yellow Brick Road Holdings Ltd (ASX: YBR) is a small-cap diversified wealth management company which is rapidly increasing its footprint throughout Australia. Although not yet profitable, the business (and analysts) expect it to be in the next two years.
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