The blue-chip space at the top end of the market is full of names every investor knows. However, I think there are a few shares that the market isn't giving enough credit to for their potential growth.
The following two large cap stocks could provide the perfect mix between growth, income and safety:
AGL Energy Limited (ASX: AGL)
AGL is one of Australia's largest energy producers and retailers with a market capitalisation of $18 billion.
An energy retailer has a lot of defensive attributes because its demand is quite predictable year to year. Customers are going to keep using energy until it's one of the last remaining bills they can't pay in a recession.
AGL is using an advertising campaign to say they are focusing on generating renewable energy in the future. It already has two of the biggest solar farms in Australia to generate electricity.
Energy producers have to keep up with society's expectations and I think building solar farms is the right thing to do due to their more reliable energy production. Solar is also getting cheaper every year, which could generate bigger profit margins for AGL.
The looming gas problem could also benefit AGL with higher prices charged. It's unbelievable to think that a country with huge gas reserves could run into a gas shortage, but AGL could be a beneficiary.
AGL is currently trading at 23x FY17's estimated earnings with a partially franked dividend yield of 2.82%.
Sonic Healthcare Limited (ASX: SHL)
Sonic Healthcare is one of Australia's largest healthcare businesses with a market capitalisation of $9.6 billion.
It has operations in many different countries including Australia, New Zealand, the UK, Ireland, Belgium, Germany and the USA.
Having earnings in so many countries makes the business a lot more defensive than if it were just in Australia. If one country encounters a problem then that doesn't affect the whole business. It also gives Sonic the option of growing into whichever country it thinks will provide the best return.
Pathology is a very important part of the treatment process. A patient can't be treated unless the doctor can analyse what the problem is. Sonic should see increased activity over the years as the ageing demographics play out.
Sonic Healthcare is trading at 21x FY17's estimated earnings with a partially franked dividend yield of 3.27%.
Foolish takeaway
I think both of the above options could provide reliable dividends and growth over the medium term. At the current prices, I think Sonic would be a better buy due to the large share price increase AGL has experienced in 2017.
