There's a lot to like about Woolworths Group Ltd (ASX: WOW) shares, but there are other ASX defensive shares that could also be excellent additions to a portfolio focused on stability.
I think a portfolio works best when there's diversification across a range of sectors.
Food retailing demand is very consistent – we all need to eat after all.
However, the business is under the spotlight for the food prices it has charged customers in the last few years. It has recently cut prices for hundreds of items, which undoubtedly will impact its profit margins somewhat.
I'm going to talk about two businesses that are steadily increasing their revenue and profit, which also have defensive characteristics.
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Telstra Group Ltd (ASX: TLS)
Telstra is the largest telecommunications company in Australia. The business is using the strength of its mobile network to implement mobile price rises that are stronger than inflation.
The company recently announced its latest price increase, which should be a boost for revenue for FY26.
I think most households and businesses place a high value on their internet connection and everything that allows them to do. This makes the company an ASX defensive share, in my view.
Telstra is adding tens of thousands of additional subscribers to its network every six months. Combined with a rising average revenue per user (ARPU), Telstra's mobile revenue should keep growing at a solid pace for the foreseeable future.
The business has pleasing operating leverage characteristics, as its profit margins are increasing because revenue is growing faster than expenses. Its network costs are being spread across more users.
As a bonus, the company has announced an intention to continue hiking its dividend for shareholders.
Charter Hall Long WALE REIT (ASX: CLW)
The other defensive ASX share that I want to highlight is a diversified real estate investment trust (REIT).
This business owns properties in a number of subsectors including pubs/hotels, government-tenanted offices, data centres, telecommunication exchanges, service stations, grocery and distribution properties, food manufacturing, waste and recycling management, and so on.
I like this diversification because it reduces risk and gives the business more areas to explore for opportunities.
What makes it particularly defensive, in my opinion, is that the business has a long weighted average lease expiry (WALE), meaning the tenants are signed on for many years.
At 31 December 2024, the business reported that its WALE was 9.7 years, which represents almost a decade of rental income and visibility.
Pleasingly for income investors, it pays out all of its rental profit to investors each year. At the current Charter Hall Long WALE REIT unit price, the ASX defensive share has a FY25 distribution yield of around 6%.
