Fund manager says avoid the big banks and buy these 4 big defensives

It’s time for investors to forget Westpac Banking Corp (ASX: WBC) and the rest of the big four banks and focus on Australia’s big four defensive shares according to Jason Beddow from Argo Investments Limited (ASX: ARG).

The managing director of one of Australia’s leading investment companies told the Australian Financial Review that the big four defensive shares have the ability to keep lifting their dividends from rising profits and still remain good options for investors despite the fact they trade on higher and higher multiples.

The big four defensive shares Beddow thinks investors should invest in are natural gas transporter APA Group (ASX: APA), private healthcare provider Ramsay Health Care Limited (ASX: RHC), Sydney Airport Holdings Ltd (ASX: SYD), and toll road king Transurban Group (ASX: TCL).

I would have to agree with these picks. Each company has a very strong position in their respective industry and although they trade on high multiples, could prove to be worth every cent in my opinion.

My pick of the two would be Ramsay Health Care and Transurban. I believe Ramsay Health Care is well positioned to capture the growth in demand for hospital care services brought about by ageing populations, increased chronic disease burden, and improvements in treatment and diagnostic methods.

With Transurban holding the rights to operate a number of vital toll roads in Australia for at least the next two decades, I feel the company is in an incredibly commanding position as Australia’s population increases and its roads get even more congested.

One thing I do not necessarily agree with is forgetting the big four banks. I still think investors with little exposure to the banking sector would do well from an investment in Westpac and Australia and New Zealand Banking Group (ASX: ANZ).

In my opinion both banks appear to be good value and provide investors with strong fully franked dividends which I do expect to grow over the next few years, albeit at a slower pace compared to the last few years.

Personally, I believe a mixture of the big four banks and the big four defensives would be a great boost for most portfolios.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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