One of the most endeared terms in investing is ‘blue-chip’. It’s a very broad word that can mean different things.
It could simply mean the biggest businesses on the share market. Perhaps it means the oldest, or the most recognised businesses. Maybe it’s meant to refer to the safest.
However, I don’t think it’s worth holding every blue chip and I don’t think a portfolio needs to hold as much Commonwealth Bank of Australia (ASX: CBA) shares as Vanguard Australian Share ETF (ASX: VAS), even if you do just want to focus on ‘blue-chips’.
I think a good option could be to invest in WAM Leaders Ltd (ASX: WLE). It’s a listed investment company (LIC) which simply means it makes the investment decisions for you.
WAM Leaders is run by the high-performing and long-running Wilson Asset Management team, with the Lead Portfolio Manager being Matthew Haupt. Indeed, WAM has been around for two decades. This LIC specialises on the large-cap shares on the ASX.
Some of its main 20 holdings include packaging business Amcor Limited (ASX: AMC), casino operator Star Entertainment Group Ltd (ASX: SGR) and construction materials business James Hardie Industries plc (ASX: JHX).
Over the past year its portfolio has returned 16.2% before fees and expenses, outperforming the S&P/ASX 200 Accumulation Index by 2.2%.
One of WAM Leaders’ main objectives is to pay a steadily-increasing dividend. Its dividend has increased each year since the first half of 2017 and it currently has a grossed-up dividend yield of 6.3%. It has only been operating for a couple of years.
WAM Leaders shares are currently trading at a slight discount to the underlying value reported at the end of September 2018, after taking the dividend into account.
If I were looking to increase my ownership of Australia’s blue chips then WAM Leaders would be one of my favourite choices to do so.
Want to invest in the best blue chips on the ASX yourself? Try these top shares for your portfolio.
For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
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Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
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Motley Fool contributor Tristan Harrison has no position in any of the 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 Scott Phillips.