Why superannuation funds love these 3 ASX 200 shares 

Superannuation shares can offer stability, dividend income, and the prospect of capital growth.

| More on:
A happy couple looking at an iPad feeling great as they watch the Challenger share price rise

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Superannuation funds invest in a diverse range of assets, including shares listed on the ASX. Popular ASX shares among superannuation funds tend to be those that offer stability, strong dividends, and growth potential.

What type of ASX shares do super funds invest in? 

Superannuation funds often invest in blue-chip stocks. This is due to their market stability, strong corporate governance, and consistent dividend payments. They also seek out shares with a strong dividend yield as these can provide a steady income stream. This is important for funds that are in the pension phase, where they need to pay out benefits to retirees.

Investing across a variety of sectors helps super funds diversify and spread risk. Popular sectors include financials, resources, healthcare, and consumer staples. While stability is crucial, super funds also look for companies with potential for capital growth. This helps ensure that the fund's assets grow over time to meet future liabilities.

3 ASX 200 shares superannuation funds love 

According to Super Guide, the most popular Australian shares invested in by self-managed superannuation funds include BHP Group Ltd (ASX: BHP), Wesfarmers Ltd (ASX: WES), and Woolworths Group Ltd (ASX: WOW). These stocks are favoured for their blend of stability, dividend yield, and growth potential. These attributes make them suitable for long-term investment strategies aimed at providing retirement security.

  • BHP: A global resources company, BHP has significant operations in iron ore, copper, and coal, commodities with enduring demand. BHP continues to invest in new projects and expand existing operations, particularly in copper and iron ore, which are crucial for the global transition to renewable energy. The company is known for solid dividend payments, with a dividend policy that aims to pay out a minimum of 50% of underlying earnings.
  • Wesfarmers: Wesfarmers owns several major retail brands including Bunnings Warehouse, Kmart, Target, and Officeworks. Bunnings remains a standout performer, often driving the group's earnings with its strong market position in home improvement. Kmart and Officeworks also contribute significantly to the group's performance. The company typically reports solid revenue, reflecting its strong presence in the retail market. Wesfarmers is also known for providing reliable dividend payments, which are highly valued by superannuation funds. 
  • Woolworths: As a major player in the retail sector, Woolworths operates Australia's largest supermarket chain. The company's performance is reliable and consistent, appealing to funds looking for defensive stocks. It generally reports strong revenue, driven by its widespread network of stores and online operations. Woolworths is also known for providing consistent dividends. 

Foolish takeaway

Superannuation funds gravitate towards S&P/ASX 200 Index (ASX: XJO) shares like BHP, Wesfarmers, and Woolworths. These companies offer stable market performance, reliable dividend income, and strategic positioning for future growth. Investing in these types of shares helps equip superannuation funds to ensure financial security for their members in retirement.

Motley Fool contributor Katherine O'Brien has positions in BHP Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Superannuation

Man looking at his grocery receipt, symbolising inflation.
Superannuation

Is your superannuation keeping up with the cost of living crisis?

Superannuation is an integral asset. How is inflation affecting things?

Read more »

a line of job applicants sit on stools against a brick wall in an office environment, various holding laptops , devices and paper, as though waiting to be interviewed for a position.
Superannuation

6 ways young investors can boost their superannuation

Young Australians' investment preferences are influencing their superannuation strategies and outcomes.

Read more »

an older man dressed in singlet wearing thick neck chains and a side turned cap holds up two fingers while operating DJ mixing equipment with a record player and headphones around his neck.
Superannuation

Why I'd buy high-yield ASX dividend shares for superannuation in retirement

High-yield ASX dividend shares can make a lot of sense in retirement.

Read more »

An older man throws his hands up in excitement as he rides a carnival swing high up in the air.
Superannuation

Top ASX shares to buy for your superannuation fund in May 2024

Is your super working hard for you?

Read more »

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Superannuation

Guess how many Australians know their superannuation balance?

We reveal how much you need in superannuation to properly enjoy your retirement.

Read more »

A middle-aged man working from home looks at his mobile phone with a laptop open on the table in front of him.
Retirement

Will you need to keep working after retirement?

Two-thirds of Australians say they plan to continue working beyond their retirement age.

Read more »

parents putting money in piggy bank for kids future
Superannuation

Is the Bank of Mum and Dad now expanding to superannuation?

Three in four Australians are planning to give some of their superannuation as an inheritance to loved ones.

Read more »

Two people smiling at each other while running.
Retirement

Australians overestimate how much they need in retirement: report

A new survey shows Australians think they need $1.6 million to retire.

Read more »