Some S&P/ASX 200 Index (ASX: XJO) blue chip shares could be good ideas to consider at the moment.
Bigger businesses have a reputation for being more reliable in times of difficulty, like COVID-19. Blue chips have the ability to continue to produce good returns over time.
These two ASX 200 blue chip shares could be particularly useful to think about:
Macquarie Group Ltd (ASX: MQG)
Macquarie is one of the largest financial businesses on the ASX with several different divisions. There’s the investment bank, the asset management segment, the retail banking division and ‘commodities and global markets’ segment.
The business generates a lot of profit. In FY21 it saw net profit of $3 billion, which was an increase of 10% despite all of the impacts of COVID-19.
This profit was delivered thanks to business’ diversified operations. It was the commodities and global markets business that really generated the growth with net profit of $2.6 billion – up 50%.
The ASX 200 blue chip remains strongly positioned with its balance sheet. The bank’s common equity tier 1 (CET1) ratio was 12.6%. Management believe the business is well positioned to operate through all market cycles and invest in growth.
The CEO and managing director of Macquarie, Shemara Wikramanayake, said:
Macquarie remains well-positioned to deliver superior performance in the medium-term. This is due to our deep expertise in major markets. Strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions, an ongoing program to identify cost saving initiatives and efficiency, a strong and conservative balance sheet and a proven risk management framework and culture.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is one of the largest and most diversified ASX 200 blue chips.
It owns a variety of different businesses including industrial businesses, a stake in a lithium joint venture and several quality retail companies including Bunnings, Officeworks and Catch.
Wesfarmers has grown Bunnings into a clear market leader in the home hardware space and it generates very strong returns.
In the FY21 half-year result, Bunnings generated $1.275 billion of earnings before tax. This represented a 76.6% return on capital.
Wesfarmers has been significantly investing in its online shopping capabilities for shoppers since the onset of COVID-19 and this is paying off. Total online sales across the group more than doubled for the half, excluding Catch. Including Catch, online sales of $2 billion were recorded.
Wesfarmers is also investing in its capabilities to ensure it’s as capable and efficient as possible.
The ASX 200 blue chip share said that it’s going to continue to develop and enhance its portfolio, building on its unique capabilities and platforms to take advantage of growth opportunities within existing businesses and to pursue investments and transactions that create value for shareholders over the long-term.