We may want to have stocks that diversify our portfolio amongst industries, but business scale diversification adds another dimension to ensure a decent return. Large-cap stocks can be the anchor or the foundation of a portfolio by offering a stable dividend with a good yield, as well as the stability of maintaining market leadership for the mid and long-term. Here are three companies that can fill that role.
Amcor Limited (ASX: AMC)
After the demerger of Orora Ltd (ASX: ORA) in December, it announced its half-year results of its continuing operations to be a statutory net profit of $326.6 million, up 21.2%. The $12.6 billion company operates an international packaging business for food and beverages, personal and home care items, as well as for industrial purposes.
The company has up to about $2 billion worth of potential acquisitions, made up of about 20 companies it is considering, and sees a healthy mix of organic growth and acquisitions going forward. A weaker Aussie dollar can benefit the company since a large proportion of its revenue comes from overseas.
CSL Limited (ASX: CSL)
Over the past five years, the bio-pharmaceutical developer and maker of blood disorder, viral, and bacterial disease products has been raising its reported net profit by a compound average of 11.6% annually. Longer term, the total shareholder return for the past 10 years is an average annual 29.2%, so it shows how stable and growing the company has been for its investors.
Its largest single market is the US, but it has a substantial market in Europe as well. As a $34.8 billion company, it is the largest pharmaceutical company listed on the ASX.
Suncorp Group Ltd (ASX: SUN)
The insurance and banking conglomerate, with a market cap of $15.7 billion, did report a half-year statutory profit of $548 million, down 4.5% from the pcp, it is still greater than the whole FY2013 full-year reported NPAT of $491 million, so the general trend is positive.
It saw a handsome recovery of its banking segment profit, up from about $4 million to $105 million, after offloading a large amount of bad loans to Goldman Sachs, so that segment is contributing more healthily to the group. The company is holding about $1.2 billion of capital more than it expects for its operating targets, and is focusing on improving its balance sheet after simplifying the business to squeeze out efficiencies and earnings.
Foolish takeaway
Large caps may not have the high share price gains of a fast growing stock, but they have the momentum of their large scale to propel them upwards over time. Sometimes they have to adjust their course to make up for changing business climates, but those can be opportunities for long-term investors to increase positions if the business story is still the same.
