The Australian share market is great place to find quality ASX blue chip shares with $3,000.
The idea of a blue chip is that it's a dependable, well-known business that you can invest in for the long-term.
However, I also think that any investment we make should have a fairly high chance of producing good returns. At the moment I can't see businesses like BHP Group Ltd (ASX: BHP), Westpac Banking Corp (ASX: WBC) or Telstra Corporation Ltd (ASX: TLS) producing solid compounding returns in their existing forms.
However, I do believe that there are a few ASX 100 shares that would be good ASX blue chip share investments with $3,000:
CSL Limited (ASX: CSL)
CSL may not be one of the most talked about businesses in Aussie households, but it actually has the largest market capitalisation on the ASX. I think that makes it an ASX blue chip share. It has been an incredibly good investment over the long-term. In just the past five years the CSL share price has risen by 223%.
The biotech business develops biotherapies and influenza vaccines that save lives, and helps people with life-threatening medical conditions.
Healthcare is an important aspect of our modern life. Just think how important finding a healthcare solution for COVID-19 is. CSL is involved in trying to find healthcare answers to COVID-19.
What I really like about CSL is its commitment to research and development. It's this constant investment into the company's future that will create new earnings streams and grow profit further.
CSL is often called expensive. It does seem expensive with the CSL share price trading at 39x FY22's estimated earnings. However, remember that it invests a large amount into research and development each year – in FY20 in spent (and expensed) US$922 million. If you take that out then the valuation looks more reasonable.
Washington H. Soul Pattinson Co. Ltd (ASX: SOL)
Soul Patts is another name that may not be as widely-known as Woolworths Group Ltd (ASX: WOW), but I think it could be a really good long-term investment. The investment house has been listed in Australia since 1903. It has great longevity. I think that makes it an ASX blue chip share as it's in the ASX 100.
Whilst the ASX share may not be very recognisable to most people, it has several well-known investments like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW) and Australian Pharmaceutical Industries Ltd (ASX: API).
It's also invested in unlisted businesses like resources, swimming schools and agriculture.
Soul Patts is the type of business that can steadily grow for many years. Its existing portfolio should be able to create decent returns and the ASX blue chip share puts new money to work every year as it receives annual investment income. It only pays out a certain amount of its net operating cashflow as a dividend after paying for its operating expenses.
As a bonus, at the pre-open Soul Patts share price it offers a grossed-up dividend yield of 4%.
A2 Milk Company Ltd (ASX: A2M)
In terms of having a nationally-recognised brand, I think A2 Milk definitely fits the description. That makes it an ASX blue chip share to me, as it's in the ASX 100. Its infant formula is found across the country in supermarkets, pharmacies and so on. Liquid milk is also sold in all major grocery stores in Australia.
The infant formula business is generating excellent growth internationally. In FY20 the 'China and other Asia' segment saw revenue growth of 65.1% to NZ$699.4 million, with earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 66.7% to NZ$224.9 million. In FY20, US revenue increased by 91.2% to NZ$66.1 million.
I think that the A2 Milk share price is a strong buy today for its long-term international growth potential.
It's currently trading at 27x FY22's estimated earnings.
Foolish takeaway
CSL is a dependable ASX blue chip share, I think A2 Milk can generate the biggest growth. Soul Patts is the type of business you could own for decades. I like all three of these ASX shares. Soul Patts is a good dividend pick, whilst A2 Milk is a good growth pick right now in my opinion.
