How I'm building my "2019-proof" investment portfolio

In anticipation of higher volatility and a waning economic outlook, here's how I'm building my "2019-proof" investment portfolio.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX200 has enjoyed a roaring start to 2019, closing out the week higher at 5,905.6 – an increase of 6.26% since the start of the year.

Despite the solid early gains, market volatility seen in late December has returned in January as concerns over the US-China trade war and a hard Brexit couldn't be dampened by any amount of Christmas cheer.

Globally, my view is that these structural headwinds are unlikely to subside anytime soon, with a weaker dollar, falling housing market and lack of wage inflation key concerns facing the Australian economy throughout the first half of the year.

I've selected my top ASX Consumer Staples stock below that I believe can form the cornerstone of my "2019-proof" portfolio in anticipation of higher volatility and a waning economic outlook.

Wesfarmers: The Stability Stock

I really like Wesfarmers Ltd (ASX: WES) as a stability prospect looking ahead in 2019.  The Wesfarmers share price closed at $32.86 on Friday, representing a 4.15% year-to-date increase for investors – particularly pleasing given I've picked the stock just to hold its own and provide some capital stability.

Wesfarmers had an incredibly active 2018 on the M&A front as CEO Rob Scott looked to divest several key assets for the Perth-based conglomerate. Chief among these were the August 2018 sales of Kmart Tyre & Auto Service for $350 million and pleasingly for ethical investors, its stake in the Bengalla coal mine for $860 million, as the company divested its last remaining interest in the coal industry. We also saw Wesfarmers spin-off its former acquisition Coles Group Ltd (ASX: COL) whilst maintaining a 15% equity stake as it has streamlined its business to focus on core earnings areas going forward.

Wesfarmers is yielding an incredible fully-franked 6.38% by my estimates, and whilst there are higher-yielding stocks within the ASX200 such as Alumina Limited (ASX: AWC) offering a whopping 10.2%, Wesfarmers is offering a much more attractive yield than rival Woolworths Group Ltd (ASX: WOW) at just 3.37%.

As my stability pick, capital preservation is really what I'm looking for as the cornerstone of my portfolio, so mild capital growth and an above average dividend yield is a double bonus in my books.

Having laid the foundation for my "2019-proof" portfolio, it's time to decide which growth stock I'm after to add some capital growth potential and Syrah Resources Ltd (ASX: SYR) is looking pretty good in my books.

Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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.

More on ⏸️ Portfolio Construction

asx shares versus cash represented by man in dinosaur mask withdrawing cash from atm
⏸️ Portfolio Construction

Top fund manager Dalio warns investors to stay away from cash

Top global fund manager, Ray Dalio, has told investors to stay away from cash and bonds in the current economic…

Read more »

three reasons to buy asx shares represented by man in red jumper holding up three fingers
⏸️ ASX Shares

How these 3 letters could see your ASX shares outshine

With the ASX 200 still down 13% from its 20 February all-time highs, these 3 letters could give some ASX…

Read more »

ASX mining shares iron ore price share price falling represented by cartoon of little business men falling off broken graph arrow
⏸️ Portfolio Construction

How I'd position my ASX share portfolio for the next market crash

The S&P/ASX 200 Index (ASX: XJO) is climbing higher today but I'm looking ahead to the next potential ASX market…

Read more »

A man holds up his hand with 3 fingers up
⏸️ Portfolio Construction

Why now is a great time to buy ASX shares

It's easy to get spooked out of buying ASX shares right now. Here are a couple of reasons why I…

Read more »

rise in asx share price represented by one hundred dollar notes flying freely through the air
⏸️ Portfolio Construction

How to make money by investing in ASX 200 shares

It's tough to know how to invest right now. Here are a few tips to help boost your chances of…

Read more »

A man scratches his head wondering if the BHP share price is a buy or not
⏸️ Portfolio Construction

Is it time to save more or invest more in ASX shares?

It's a scary time to invest in ASX shares. But here's why I won't be sitting on cash and waiting…

Read more »

⏸️ Portfolio Construction

5 blue chip ASX 200 shares a beginner can use to start a share portfolio

Here are 5 ASX shares like Wesfarmers Ltd (ASX: WES) that a beginner can use to start building a diversified…

Read more »

New ASX share buy ideas
⏸️ Portfolio Construction

3 tips for beginners investing in ASX shares

Here are a few simple investing tips for beginners looking to build out their ASX share portfolio in the current…

Read more »