The Top 5 Blue Chip Stocks in Australia

What are the blue chip stocks you can find in Australia?

Australian blue-chip companies are well-established enterprises with a solid standing in the market. These are typically businesses that have been around for some time, pay consistent dividends and have a track record of generating profits.

Blue-chip stocks are shares in companies with a high level of prestige and market standing. They have usually earned the respect of many investors and other businesses over the years.

You probably already know of some of these companies, without being aware of their ‘blue chip’ status. 

Having a company name added as one of the elite blue-chip stocks in Australia is a mark of success. The value of such a stock is based on an often-long history of solid performance and dependability. That reputation takes years to build, and it is one of the reasons why these stocks are valued so highly.

Rather than go through a full list of blue-chip stocks Australia has to offer, we’ve provided a list of the top 20 blue-chip stocks on the Australian Stock Exchange (ASX) as of today. We’ve also zoomed in on the top 5 of those 20 to see why they stand out.

The ingredients to a blue-chip stock 

Blue-chip stocks are marked by several different facets. The so-called ‘blue chip names’ on the Australian market are known to contain the majority of these important criteria.

While there is no official definition of what constitutes a blue-chip stock, here are the most common parts of that special standing:

• Financial strength is marked by low or modest debt, a strong credit rating, and a significant amount of cash.
• Performance is the cornerstone of a blue-chip status which includes a share price that has steadily risen over a long period and has shown no notable volatility.
• Strong historical profit growth is backed up by continued growth in future earnings. 
• Business models are attractive and reliable along with a defensible market position.
• A renowned and respected management team who have tracked records in successful enterprises, especially in long-term positions.
• Considerable market capitalisation is one of the largest in that respective industry.

These characteristics are a mainstay of blue-chip companies that will show most of, if not all these traits. 

Stocks in the ASX 20 Index 

Here are the top 20 ASX-listed blue chip stocks as listed by the S&P/ASX20 as of the time of writing: 

Top 5 Blue-chip Stocks in Australia 

Here are profiles of the top 5 blue-chip shares on the S&P/ASX 20 index. 

1. BHP Group Ltd 

• Ticker Symbol: BHP
• Industry: Materials
• Market Capitalisation: $223 billion

Profile highlights:

• BHP is among the world’s top producers of commodities, including iron ore, copper, nickel and metallurgical (steelmaking) coal.
• BHP has a track record of profitability, with an overall profit of over $US 30 billion^[1]
• BHP paid 90 U.S. cents ($A 1.36) per share as of March 2023^[2]
• As Australia’s largest company and the largest mining company in the world, BHP is considered a robust entity with a continued look at prospects.

2. Commonwealth Bank of Australia (CBA)

• Ticker Symbol: CBA
• Industry: Financial Services
• Market Capitalisation: $161 billion

What makes CBA special:

• CBA is the largest bank in Australia, with a market capitalisation of over $161 billion.
• It has a strong track record of profitability, with a cash net profit after tax of $5.15 billion for the half year ended 31 December 2022^[3]
• As of March 2023, CBA paid a dividend of over $2.10 per share, which provides investors with a steady stream of income^[4]
• CBA is well-positioned for future growth, with a strong presence in the Australian economy and a growing international business.

3. CSL Ltd

• Ticker Symbol: CSL
• Industry: BioTech – Healthcare
• Market Capitalisation: $148 billion

Highlights:

• CSL – including its three businesses, CSL Behring, CSL Seqirus and CSL Vifor – provides lifesaving products to patients in more than 100 countries.
• It has more than 30,000 employees across the globe.
• Established in Australia in 1916 then privatised and listed on the ASX in 1994.
• CSL delivered a net profit after tax of $US 1.62 billion for the first half of the financial year 2023^[5]

4. National Australia Bank

• Ticker Symbol: NAB
• Industry: Financial Services
• Market Capitalisation: $79 billion

What is special about NAB:

• NAB is Australia’s third-largest bank by assets, but the second-largest by market capitalisation at $79 billion. 
• It operates in Australia, New Zealand and throughout different parts of the world
• In January 2023, NAB announced that it would create a stablecoin called the AUDN that would be pegged to the Australian Dollar^[6]
• It recently posted a profit with a dividend of 83 cents payable in July 2023^[7]

5. Westpac

• Ticker Symbol: WBC
• Industry: Financial Services
• Market Capitalisation: $70 billion

The strengths of Westpac:

• Westpac is another of the so-called Big 4 banks of Australia. 
• It started as the Bank of NSW and was the first Australian bank before becoming the Westpac Banking Corporation in 1982.
• Was awarded the 2022 Best Private Bank Australia, Global Private Banking Innovation Awards^[8]
• Westpac has shown a consistent dividend, with a rise from $0.64 in Dec 2022 to $0.70 payable in June 2023^[9]

As you can see from the profiles above, blue-chip stocks are considered to be good investments due to their financial stability and strong track record of performance.

The blue-chip names in Australian stocks 

As the leading Australian blue-chip stocks, these companies have trusted stability in their structure and performance. 

Their name alone conjures up a strong and reliable brand and a solid choice of investment. That dependable performance often comes with a history of paying consistent dividends.

It is important to remember that none of these stocks are immune to market forces. The performance of even the most dependable blue-chip stocks can be affected by adverse market events like recessions.  

Always conduct proper research before investing in any potential blue-chip stocks. 

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This information was accurate as at the time of writing being the 8th of June, 2023

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