We all know investing in shares can be risky; that’s why you get a return. Not all shares are as risky as others, though. If you’re looking for exposure to the Australian stock market, but you have a low-risk tolerance, ASX utility shares could be a great addition to your portfolio.
Mature utility companies are stable, and they usually have a strong customer-base and healthy cash flow. Another thing that makes these companies attractive is the essential services they provide such as electricity, gas, water, and internet.
How is the utility sector in Australia performing?
In the financial year to date, the ASX200 Utilities Index (ASX: XUJ) has risen by 8.43%. Increasing steadily from the $4,000 mark in 2010 to its current share price of $8127.80, the utility sector in Australia is looking strong and steady.
Here are 2 ASX utility sector shares to consider buying in April:
AGL Energy Limited (ASX: AGL)
As one of Australia’s largest energy companies, AGL Energy Limited is a fantastic option to gain exposure to utilities. Currently trading at $21.84, the AGL share price has seen strong growth since late-2018.
Another factor I like about AGL is its diverse portfolio across traditional and renewable energy sources. The company’s dividend yield of 5.46% also makes this an attractive option.
Ausnet Services Limited (ASX: AST)
Ausnet Services Limited owns and operates the electricity transmission network in Victoria. With a variety of energy and infrastructure products and services, the company has a strong customer base from households to corporate companies and the public sector.
The company also announced in late-March that it was working with the Victorian government to make sure it maximises the benefits of the Victorian government’s solar homes policy. This policy currently provides a 50% rebate up to the value of a 4kW solar panel system. That means Victorian households will get a rebate of around $2,225 if they install solar panels at their property.
With the push for renewable energy sources continuing across Australia, plus Ausnet’s core business operating Victoria’s electricity network, I think this is a good long-term play for steady and stable growth in your portfolio.
At the time of writing, the Ausnet share price is trading at $1.81. And with a healthy dividend yield of 5.28%, this could be another great addition to your portfolio.
It’s important to remember that investing in ASX utility sector shares isn’t going to result in astronomical returns in the short-term. Over the long-term, however, it’s these types of shares that can provide steady returns year after year.
If you choose to reinvest your dividends and let your portfolio grow over time, your investment could compound into a healthy balance in the years to come. This is where investing becomes very powerful — when your portfolio grows to a balance that allows you to live off a portion of your capital growth and dividends.
Adding bluechip shares to your portfolio can be a great compliment to these utility sector shares. Check out the Motley Fool’s top 3 bluechip shares for 2019.
Where to invest $1,000 right now
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Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Motley Fool contributor Nicola Smith 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.
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