Ask A Fund Manager
The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Shaw and Partners senior investment advisor Adam Dawes expresses his fear for a world in which the stock market closed for four years.
The ASX share for a comfortable night's sleep
The Motley Fool: If the market closed tomorrow for four years, which stock would you want to hold?
Adam Dawes: If the stock market's shut down for four years? I'd be out of the job! I don't like any of that scenario.
Okay, so one stock… Look, we're in Australia, we're a commodity-based market. So BHP Group Ltd (ASX: BHP) would be the one stock.
[It's] just sold its oil and gas assets to Woodside [Woodside Energy Group Limited (ASX: WDS)]. They've got a lot of cash sitting on their balance sheet. That means that would continue to pay out dividends… As a private business that would continue to pay out shareholders going forward.
I think that's certainly something that I would look to hold for four years but, mate, that means I wouldn't be able to pay the mortgage and we would all be in a lot of trouble.
So BHP would be that one that you would hold for those times, definitely that time.
MF: The BHP stock price has been relatively stable for a company that's in a cyclical industry, isn't it?
AD: Very much so. It is in the top 10 dividend-paying stocks globally.
Now you never buy a resource stock for a dividend, but Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG), and BHP are in the top 10 dividend-paying stocks globally.
So [that] alone, we know that there's enough cash there to wait out any kind of commodity cycle. Albeit we're in a good commodity cycle at the moment, but it is a cycle and that will always turn. But at the moment, there's cash there to sit on the balance sheet to keep everything moving in the right direction.
