With the S&P/ASX 200 (INDEXASX: XJO) index seemingly stuck just below its all-time high level it reached at the end of July, it seems some market despondency has taken over all the investing hearts and minds out there. That doesn’t mean we shouldn’t be looking for quality investments though! With the Reserve Bank of Australia (RBA) considering yet another interest rate cut, your cash certainly isn’t making you any returns!
Saying this, here’s where I would deploy a $10,000 investment today:
Telstra Corporation Ltd (ASX: TLS)
I think Telstra shares have been looking cheap for a few weeks now – the telco has descended from the $4 mark that it hit in early August to hover around the $3.51 level today. In my opinion, there’s some value here, especially considering Telstra is offering a starting 4.57% dividend yield (6.53% grossed-up) if you were to buy in at current prices.
Telstra has made it clear that the NBN will be a considerable drain on its finances for the next year or two, but as the company rolls out what I expect will be Australia’s best 5G network going forward, I think its fortunes will turn around substantially from here.
Transurban Group (ASX: TCL)
If the RBA cuts rates today, it will make ‘bond proxy’ dividend shares like Transurban even more desirable for investors desperate for income. Being a toll-road operator and owning some of the busiest roads in Sydney, Melbourne and Brisbane, Transurban’s earnings base is viewed as extremely reliable and ‘all-weather’ – meaning its dividend enjoys the same reputation. On today’s pricing, Transurban offers a 4.02% yield – which is looking pretty good compared to a 1.5% term deposit.
Vanguard Australian Shares Index ETF (ASX: VAS)
A market-tracking exchange traded fund (ETF) like VAS is always a good investment choice in my view – after all, most active managers struggle to beat this benchmark over a 5 or 10 year timeframe, so why pay them to try when you can go with VAS, which charges a paltry fee of just 0.1% p.a. Owning 300 of the biggest ASX companies gives you all the diversification you could want from the ASX, along with a dividend yield of around 4.03%.
I think all three of these investments offer investors good value today. I am more inclined towards Telstra and VAS at current levels, but I understand the valuable income certainty that Transurban can offer income investors as well.
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Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Transurban Group. 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.