The S&P/ASX 50 index may not be as well-known as the illustrious ASX 200 index, but it is still a very important large cap index.
It is home to 50 of the largest shares on the Australian share market. These are predominantly household names and companies of bona fide blue chip status.
While not all shares on the index are buys, I think there are a few that could be great additions to a balanced portfolio. Two of my favourites are listed below:
Goodman Group (ASX: GMG)
The first ASX 50 share to consider buying is Goodman Group. It is an integrated commercial and industrial property group that owns, develops, and manages industrial real estate across 17 countries. Among its portfolio of 392 properties, you'll find warehouses, large scale logistics facilities, and business and office parks. It also has $6.5 billion of work in progress at present, which will bolster its portfolio in the coming years.
But why invest in Goodman Group over other property companies? I think it is a standout pick in the industry due to its exposure to markets experiencing structural tailwinds. These include its warehouses and logistics facilities which have exposure to the ecommerce boom through tenants such as tech behemoth Amazon. In fact, the company recently strengthened its relationship with Amazon. The ecommerce giant signed a 20-year lease for a new distribution centre in Western Sydney owned by its joint venture with Brickworks Limited (ASX: BKW).
Telstra Corporation Ltd (ASX: TLS)
Another ASX 50 share I would buy is Telstra. I think the telco giant would be a great option, especially after its shares recently dropped to a 52-week low. This share price weakness has been driven by concerns over the sustainability of its dividend following its softer than expected guidance for FY 2021 due to the pandemic.
Nobody knows what will happen to its dividend this year, but it does appear as though a cut to 12 cents per share has been priced in. I believe this means the downside risk from the current level is limited and the upside potential is substantial should its dividend be maintained. Beyond the pandemic, I believe its outlook is improving greatly and a return to growth could be on the cards in the coming years. This is thanks to the progress of its T22 strategy, the easing NBN headwind, the arrival of 5G internet, and rational industry competition.
