2 ASX shares I'd buy to quickly add diversification

I like these stocks for Aussies wanting different blue-chip exposure.

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The S&P/ASX 200 Index (ASX: XJO) is heavily influenced by two sectors – ASX bank and mining shares.

ASX large-cap shares within these sectors include big iron ore miners like BHP Group Ltd (ASX: BHP), Fortescue Ltd (ASX: FMG) and Rio Tinto Ltd (ASX: RIO). Within the banking sector, we have the big four banks, including the Commonwealth Bank of Australia (ASX: CBA).

But there's a lot of competition in the banking space, and ASX iron ore shares are at the mercy of the iron ore price.

In this article, I'm going to discuss two large businesses from other sectors that can provide diversification. I think the below stocks are quality long-term choices.

Telstra Group Ltd (ASX: TLS)

Telstra is the market leader in Australia's telecommunications sector. It has a strong market position in the mobile space, enabling it to generate enormous amounts of revenue and profit.

The profit enables Telstra to re-invest more into its new 5G network than other telcos, keeping it ahead of rivals and continuing the market-leading position.

Technology continues to grow in usage and importance in Australia. An internet connection is essential for most businesses and households, so I think it has very defensive existing earnings. It continues to win new subscribers, which is increasing its operating leverage.

Telstra is working on a 5G-powered wireless home broadband – it could capture much of the NBN's profit margin.

It offers an appealing and growing dividend. The ASX share is projected (according to Commsec) to grow its dividend by 5.6% to 19 cents per share, which is a grossed-up dividend yield of 7%.

Charter Hall Long WALE REIT (ASX: CLW)

This real estate investment trust (REIT) owns a diversified commercial property portfolio. Aussies love residential property, but I think commercial property is worth a spot in a portfolio, particularly for income-seekers.

It's exposed to a number of defensive tenant industries such as government (19%), pubs and bottle shops (19%), telecommunications (14%), fuel and convenience (11%), grocery and distribution (10%), food manufacturing (8%), waste and recycling management (2%) and 'other' (18%). The 'other' category includes life sciences, retail, banking, financial and defence services.

The business has numerous listed tenants including Endeavour Group Ltd (ASX: EDV), Telstra, BP, Inghams Group Ltd (ASX: ING), Metcash Ltd (ASX: MTS), Coles Group Ltd (ASX: COL), Myer Holdings Ltd (ASX: MYR) and Westpac Banking Corp (ASX: WBC).

Pleasingly, it has a long portfolio weighted average lease expiry (WALE) of more than 10 years. Its guided FY24 distribution translates into a distribution yield of 6.8%.

Motley Fool contributor Tristan Harrison has positions in Fortescue and Metcash. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group and Telstra Group. The Motley Fool Australia has recommended Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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