BHP Group Ltd (ASX: BHP) is one of the most popular blue chips on the ASX. I'd much rather invest in blue chip healthcare shares.
BHP is a big dividend payer for Australian investors, but I'm not sure how much further BHP can grow considering how big it already is. The other reason I'm not interested in buying BHP, aside from the current high valuation, is that its earnings can't consistently grow because of resource prices.
I'd rather buy these two ASX healthcare shares:
Ramsay Health Care Limited (ASX: RHC)
Ramsay is one of the largest private hospital operators in the world with its hospital networks in Australia and Europe.
Australia is one of many countries facing ageing demographics. The number of people in retirement is expected to rise by around 40% over the next decade and 70% over the next two decades.
Sadly, the older we get the more likely medical treatment will be needed. Ramsay is a clear beneficiary from this trend as it expands it hospital network through expansions, greenfield builds and acquisitions.
As a bonus, it has increased its dividend every year since 2000. It's currently trading at 23x FY21's estimated earnings.
CSL Limited (ASX: CSL)
CSL is Australia's biggest healthcare business with a global research & development footprint, there are several locations in both Europe and the US.
One of the best reasons to like CSL is that it's constantly investing heavily into research and development, spending around 10% to 11% of global revenue on R&D each year. In FY19 it spent US$832 million with a big increase in spending on new products.
There is a constant pipeline of new biotherapies coming onto the market and new regional regulatory approvals.
CSL's products are an important part of our society and are much more defensive than resource prices.
It's currently trading at 35x FY21's estimated earnings with a dividend yield of around 1%.
Foolish takeaway
I'd definitely prefer CSL and Ramsay over BHP at the current share prices. Looking over the next three to five years I think I'd prefer Ramsay, but it's hard to bet against CSL.
