The Motley Fool

Diversify your portfolio with BHP, ResMed, and Wesfarmers shares

If you’re looking to diversify your portfolio to protect it against potential market shocks, then you might want to consider the ASX shares listed below.

I have picked out three top ASX shares in different sectors which I feel could bolster your portfolio if you don’t already have exposure to that particular area of the market.

They are as follows:

BHP Group Ltd (ASX: BHP)

I think having a little exposure to the resources sector can be a good thing for a portfolio. And if you’re going to buy a mining share, you might as well go for the best in the sector. Which I believe to be BHP due to its diverse, world class, and low costs operations, its strong balance sheet, and its attractive valuation. Another positive is its penchant for returning funds to shareholders. Based on the current BHP share price, I estimate that it provides investors with a fully franked ~5% FY 2021 dividend.

ResMed Inc. (ASX: RMD)

If you don’t have exposure to the healthcare sector then ResMed could be a good option. It is a leading medical device company which specialises in sleep treatment hardware and software. I believe ResMed shares could provide strong returns for investors over the next decade thanks to its very positive long term outlook. This is thanks to its exposure to the proliferation of obstructive sleep apnoea (OSA). The company estimates that only 20% of OSA sufferers have been diagnosed at this point. If this is accurate, it gives ResMed a significant runway for growth over the next decade and beyond.

Wesfarmers Ltd (ASX: WES)

Finally, investors looking for exposure to the retail sector may want to consider Wesfarmers. I think the conglomerate is a top option due to its collection of leading retail brands, which all look well-placed for growth over the long term. Especially its key Bunnings brand, which is now its biggest generator of revenue. In addition to its retail exposure, Wesfarmers gives investors a little access to the industrials and chemicals industries through its portfolio. Combined, I believe it is capable of growing its earnings and dividend at a solid rate in the coming years. This could lead to the Wesfarmers share price charging notably higher from where it trades today.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

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 June 30th

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

Related Articles...