If you are interested in investing some of your savings into the Australian share market for the first time, there is no better place to start than the ASX 200, which includes the 200 largest publicly listed companies in Australia.
If you are a first-time investor, you should consider the importance of diversifying your funds across various companies, sectors and investment styles, to smooth expected returns and reduce the risk of losing large amounts of money. This is particularly relevant given the recent volatility in the market.
With this in mind, let’s take a look at 3 ASX 200 shares I would buy today with $10,000.
Macquarie Group Ltd (ASX: MQG)
Macquarie Group is currently my favourite financial services company on the ASX 200 and has proven to be a very well managed organisation over the years.
Macquarie Group has generated a total shareholder return of around 18% over the last 12 months, outperforming the ASX 200 financials index (excluding REITs) (ASX: XXJ) by roughly 34%.
This is primarily due to strong financial performance, with the company generating a net profit of $1.31 billion in H1 2019, up 5% on H1 2018. Macquarie Group has also been relatively unscathed from the Hayne Royal Commission compared to the Big 4 Banks.
I also like Macquarie Group due to its diversified service offering, operating as the world’s largest infrastructure asset manager and Australia’s top ranked mergers & acquisitions advisor, as well as having operations in corporate and asset finance, banking and financial services and in capital markets facing businesses.
Currently trading at a price to earnings ratio of less than 13x and with a dividend yield of 5%, I believe Macquarie Group is currently the best way to gain financials exposure in the ASX.
CSL Limited (ASX: CSL)
CSL has been a standout performer on the ASX 200 over the last 25 years, with the company initially listing at $2.30 per share and now trading at around $180 per share. In the last 12 months, CSL has generated a total shareholder return of nearly 32%.
The company continues to outperform the share market by successfully marketing its R&D program and dominating the biotechnology industry with its cutting-edge vaccines and blood plasma products. CSL consistently exceeds market expectations by delivering outstanding earnings growth year on year, with the company generating a net profit of $1.73 billion USD in FY18, up 30% on FY17.
Currently trading at a price to earnings multiple of 32.5x and with a dividend yield of around 1.5%, I believe CSL is a must have for every Australian share market investor, with the company being one of the most successful growth shares ever listed on the ASX.
Inghams Group Ltd (ASX: ING)
Inghams is currently my favourite value stock on the ASX 200, with the poultry producer offering investors a consistent and reliable earnings stream. In the last 12 months, Inghams has generated a total shareholder return of nearly 29%.
As the largest vertically integrated poultry business in Australia, Inghams is well positioned to benefit from Australia’s rising consumption of Chicken, which is a staple in our diet and is consumed more than beef and pork combined.
Furthermore, poultry production is a defensive industry, as demand for chicken meat would be unlikely to soften significantly in a declining economy. Therefore, Inghams is well poised to generate reasonably stable earnings irrespective of how the economy performs.
Currently trading at a modest price to earnings ratio of 13.3x and with a dividend yield of 4.5%, I believe Inghams offers investors exceptional value and should have a place in any well-diversified Australian share portfolio.
I believe that these 3 companies will outperform the market in the long run, due to their strong management and sustainable competitive advantages.
If you are looking to invest in the Australian share market for the first time, I believe that Macquarie Group, CSL, and Inghams are a great starting point to build a well-diversified portfolio around.
These 3 stocks could be the next big movers in 2020
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Motley Fool contributor Gregory Burke 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.