If you tend to be more risk-averse than the average investor, the stock market can sometimes feel like a scary place. Market volatility can cause big swings in the value of your portfolio, which can make checking your investment account a nerve-wracking experience.
However, there are also plenty of safer options available on the ASX that can reduce your volatility and help you grow your wealth over the long term. In this article, we look at three ASX blue chips that have proven themselves to be high-quality investments over time.
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Transurban Group (ASX: TCL)
Toll operator Transurban is one of the safest dividend stocks on the ASX – and with a market cap of $39 billion, it's also one of the largest. It currently pays a healthy dividend yield of close to 5%, and for the past few years, its shares have consistently traded within a band of about $12 to $14 with relatively low volatility. This makes Transurban an ideal 'set and forget' income earner to add to your portfolio.
The reason Transurban is such a safe buy is the consistency of its earnings. Regardless of broader economic trends and downturns, people still need to get from A to B, and Transurban's toll roads help them do just that. It owns and operates several major toll roads around the world – notably CityLink in Melbourne and the Cross City tunnel in Sydney.
Transurban generated revenues of over $4 billion in each of the last two financial years, and proportional earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 7.5% year-on-year to $2.63 billion in FY24.
Coles Group Ltd (ASX: COL)
As one of Australia's two largest supermarket chains, Coles is another great defensive share to add to your portfolio this November. Primarily a retailer of consumer staples, Coles is also able to generate consistent revenues in just about any economic environment.
Its recent financial performance was particularly impressive. The company raked in over $43 billion in revenues in FY24, and underlying net profit after tax (NPAT) jumped 4% year-on-year to $1.21 billion.
Leading broker Bell Potter also recently slapped a buy rating on Coles shares with a 12-month price target of $21.55. Considering Coles shares currently trade for $17.71, that's a potential upside of over 20%.
It should be noted that an investment in Coles doesn't come without risk. Coles and Woolworths Group Ltd (ASX: WOW) have both found themselves in hot water with the ACCC recently over allegations that they misled shoppers with bogus price discount promotions. The Coles share price took a significant hit as a result, and it's still down about 8% since the ACCC made its allegations public in late September.
If proved true, these allegations could result in reputational damage and hefty fines for both grocery chains. But it doesn't really change the underlying business fundamentals that (in my opinion, at least) still make Coles a great, safe stock to buy and hold for the long term.
REA Group Ltd (ASX: REA)
REA owns realestate.com.au, Australia's leading residential property listing website. Its strong market position gives it significant pricing power and a strong economic moat. Broker Goldman Sachs even recently went so far as to say that REA is one of the 'highest quality names' among the ASX stocks they cover.
Unlike Coles or Transurban, REA has been a genuine growth stock to hold over the past five years, with its share price more than doubling in that timeframe (versus +16% for Coles and -13% for Transurban). However, due to its competitive advantage, it is also a relatively safe stock to put your money in.
Its recent financial performance has been very strong, with revenues up 23% year-on-year to $1.45 billion for FY24 and NPAT (excluding significant non-recurring items) up 24% to $461 million. And, despite the impacts of higher interest rates on the property market, management remains bullish about the future, with CEO Owen Wilson (not the Hollywood actor) commenting that "REA enters FY 2025 in a strong position and with a clear strategy to drive growth."
