Investing in the stock market can be a bit daunting, especially if you're just starting out.
Here are three ASX shares that I believe are perfect for beginners. These shares are known for being stable and reliable, making them ideal choices for those new to investing.
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Steadfast Group Ltd (ASX: SDF)
The first pick goes to the insurance brokerage group Steadfast, which provides general insurance brokerage and underwriting services.
Steadfast has delivered consistent earnings growth. Over the past five years, the company's earnings per share (EPS) have grown at a compound annual growth rate (CAGR) of 13%, reaching 10.2 cents per share (cps). For the full year in FY24, management anticipates underlying diluted EPS growth of between 11% and 16%.
During the same period, the dividend per share (DPS) has risen at a CAGR of 15% to 16 cps. At the current share price, the company offers a dividend yield of close to 3%.
Steadfast reported a robust set of numbers in its 1H FY24 results. Its underlying revenue rose 19.4% from a year ago to $790.4 million, and underlying net profit after tax (NPAT) 17.5% to $106 million. Such growth was driven by strategic acquisitions as well as a solid organic profit growth of 13.4%.
The company insiders own approximately 8.5% of the company. This includes a 5% stake in Mr Jim Angelis following the acquisition of Coverforce Holdco, which Angelis founded.
Its shareholders include some major institutional investors. Australian Super owns 7.5%, followed by First Sentier Investors owning 5%, and Fidelity Management & Research company (FMR) at just about 5%.
The Steadfast share price fell 10% over the past year, which is a rare event based on its trading history. Steadfast shares are trading at $5.40 at the time of writing.
Brickworks Limited (ASX: BKW)
Next up is Brickworks, a building materials provider that also engages in property development.
It's largely an asset story. Brickworks owns a substantial portfolio of investment assets, including listed shares and property development ventures.
One of its key holdings is a 26.1% stake in Washington H Soul Pattinson Ltd (ASX: SOL), which is another excellent investment. In property development, Brickworks collaborates with Goodman Group (ASX: GMG) to unlock the hidden value of its extensive land holdings.
If you're familiar with Sydney's property market, you know how bustling Western Sydney has become with the construction of the second airport and the residential property shortage. Brickworks owns a large parcel of land in this area.
In its May 2024 trading update, the company estimated its net asset value (NAV) at around $5.6 billion or $36.68 per share. This is far above its share price of around $26.50 today.
Over the past ten years, the company has increased its dividends annually. Impressively, it has maintained a record of 48 years without reducing its full-year ordinary dividend since 1976, as my colleague Tristan highlighted.
At the current share price, Brickworks offers a fully-franked dividend yield of 2.5%.
The Brickworks share price fell approximately 13% from its 52-week high of $31.4 in March 2024. Brickwork shares are trading at $26.67 at the time of writing.
BHP Group Ltd (ASX: BHP)
Last but not least, BHP Group is a leading global resources company involved in the exploration, production and processing of minerals and oil.
Cyclicality is inevitable for any mining company. However, BHP is well-positioned to weather market fluctuations thanks to its improved operating efficiency and balanced product mix.
The company aims to grow its core iron ore production while expanding its copper exposure through the acquisition of Oz Minerals.
BHP boasts a high return-on-equity (ROE) of 19% using the latest 12-month financials. Its ROE tends to range from single digits to above 40% throughout the commodities cycle. However, it's one of the lowest cost producers in its respective mining sectors compared to its peers.
Using FY25 EPS estimates by S&P Capital IQ, BHP shares are trading at just about 11 times. At the current price, the company offers a dividend yield of 5.5%.
The BHP share price is down 7.4% over the past year to $42.68 today.
Foolish takeaway
I believe the three ASX shares are attractively valued based on their fundamentals and carry relatively low risks, making them suitable options for beginners.
