Insights for Investors by Investors

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.

Information warning: The information in this article was published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

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