With Australian interest rates predicted to keep falling as time goes on it seems likely that shares could be the best place for your money. Why earn pittance in the bank?
It's true that cash is a good short-term hedge against market volatility. It's always good to have a bit of cash set aside for emergencies, but it isn't going to earn you much either.
That's why it's worth considering whether these leading ASX blue chips are worth a spot in your portfolio:
Scentre Group (ASX: SCG)
The owner of Westfield shopping centres in Australia and New Zealand has seen its share price fall 29% since its 2016 all-time high, which is quite rough for a seemingly defensive business in a falling interest rate environment. It continues to maintain a very high occupancy rate and it's working on transforming its locations into 'living' centres, not just shopping places, so there are positives. Although the distribution yield of 5.9% distribution yield is attractive, I think online shopping is a big long-term threat that could hurt the value of Scentre's rent and the properties.
CSL Limited (ASX: CSL)
Is there are better blue chip than CSL in the ASX20? Perhaps not. Its impressive and growing portfolio of healthcare products is extremely valuable and it continues to invest a healthy amount of its profit back into further research & development. My main concern with CSL is its valuation at over 32x FY20's estimated earnings. How much more can CSL really grow its almost $100 billion market cap at a market-beating rate? Big numbers get harder to compound. I'd be happy to buy shares of CSL on any market pullbacks.
BHP Group Ltd (ASX: BHP)
The big Australian resources business has been through its fair share of ups and downs, booms and busts. It's currently in a boom phase with the iron ore price at a high. How long can the good times last? I'm not sure, but BHP is being a delightful dividend payer at the moment. However, resources are notoriously cyclical, so I wouldn't bet the house on when things are going to take a turn for the worse. BHP's performance relies on China too much for my liking for a long-term hold at the current price.
Foolish takeaway
Scentre could surprise the market if it can reduce its reliance on retail shopping that can be replicated online. However, if I had to choose one for the next decade at today's prices it would definitely be CSL. It's high-quality and may be able to continue to grow profit at a decent rate for at least the next several years.
