Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Two defensive stocks for volatile markets
Having quality and defensive ASX shares in a portfolio can be very useful if you’re looking for reliable profit.
They may still be a bit volatile, that’s the price of investing in the share market.
However, the two ideas I’m going to write about may have consistent operating earnings in the coming years with steady growth potential, as well as a decent yield:
APA Group (ASX: APA)
APA is an energy infrastructure ASX share.
It owns various assets around Australia. The business owns a national gas pipeline. It also has investments in gas storage, gas energy generation and renewable energy (wind and solar).
The gas pipeline earnings are defensive. It supplies half the nation with their natural gas usage. Business and household customers need their energy.
APA regularly invests in new pipelines to add to its network, this increases earnings and cashflow. It currently has projects on both the East and West coast of Australia.
APA has grown its distribution every year for a decade and a half. It has predicted that the FY22 distribution will be $0.53 per unit (up 3.9%). That translates to a forward potential yield of 5.8%.
Whilst gas is not a high-growth area, APA is focused on the renewable energy and electrification future for Australia and the US where it sees billions of dollars of investment opportunities.
There is also the potential for APA’s current gas pipeline to be repurposed as a hydrogen pipeline, which would extend its earnings potential for a lot longer.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
WHSP is an ASX share that operates as an investment house.
That means it has a diversified portfolio with some positions being large chunks of the portfolio.
For example, TPG Telecom Ltd (ASX: TPG) and Brickworks Limited (ASX: BKW) are the two largest holdings and both have fairly defensive earnings.
When you actually look at the portfolio of businesses that WHSP is invested in, investors will see that management have tried to put together a portfolio that’s defensive and largely uncorrelated. Some of those businesses are performing well.
When you combine the sectors that WHSP is invested in like financial services, resources, agriculture, telecommunications, swimming schools and so on, WHSP has a solid group of assets that will hopefully be able to keep performing. Retiree living is one of the new investment focuses.
The ASX share is regularly adding to its portfolio, adding to the quality and diversification.
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