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Why I would buy Telstra and these ASX 50 shares

The S&P/ASX 50 index is arguably the country’s most important large-cap equity index.

It has been designed to represent 50 of the largest and most liquid shares listed on the ASX by float-adjusted market capitalisation.

Whilst I wouldn’t necessarily be a buyer of all the shares on the index, I think there are some top options for investors to consider. Three I would buy today are listed below:

Australia and New Zealand Banking Group (ASX: ANZ)

If you don’t already have meaningful exposure to the banking sector, then I think ANZ could be worth considering. It remains my favourite in the sector due its attractive valuation and generous dividend yield. Furthermore, with the housing market improving greatly, I expect demand for home loans could increase strongly in the near term. As these are highly profitable for the big banks, it could support modest earnings and dividend growth over the next few years. 

BHP Group Ltd (ASX: BHP)

If you’re happy to invest in mining shares then I feel BHP would be worth considering. I believe it is the highest quality option in the sector due to its diverse and low cost operations. Further, with the prices of the key commodities its produces remaining favourable, I believe it is well-placed to generate bumper free cash flows again this year. So, with management having a penchant for returning the majority of its free cash flows back to shareholders, I believe this bodes well for dividends in 2020.

Telstra Corporation Ltd (ASX: TLS)

A final ASX 50 share to consider is Telstra. I’ve been very impressed with the early success of its T22 strategy and believe it is making Telstra a much stronger company. Furthermore, with the end of the NBN rollout now in sight, I remain confident that a return to the good days is not far away. In light of this, I think now would be a good time to consider a long-term investment. Especially if you’re an income investor, as Telstra’s shares currently provide an attractive estimated 4.5% forward dividend yield.

As well as Telstra, I think these quality blue chips would be great buys in 2020. They look set to continue growing both their earnings and dividends at a strong rate for many years to come.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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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