In terms of solid, dependable, blue-chip stocks, it doesn't get much bigger than the big banks, the major miners and Telstra Corporation Ltd (ASX: TLS). Together, they make up a staggering portion of the ASX. But there is another blue-chip stock with rock-solid fundamentals that you definitely know about, yet it still manages to sit just under the radar of most investors.
The stock in question is the stock market itself, ASX Ltd (ASX: ASX).
One of the best features about ASX is that it has no major competition. Yes, there are one or two other exchanges, Chi-X for one, but they have a long way to go to match the ASX. The major reason for this is that the ASX has larger trading volumes, which is where companies looking to list want to be.
This lack of competition provides ASX with steady earnings and steady growth, two big positives. Even in tough times, markets continue to be available to buy and sell, and ASX is perfectly positioned to ride it all out.
Even so, ASX has not been one to rest on its laurels. In the 2014 financial year alone, it spent $43.2 million to improve services and further develop its network infrastructure.
However, one effect of being essentially a monopoly is that the company comes under a lot of regulatory scrutiny from ASIC (Australian Securities and Investment Commission) and the RBA. So far though, it has managed to keep out of trouble.
Additionally, ASX has a great track record of increasing its dividend payouts, which are 100% fully franked. The board's policy is to pay out 90% of profits and with a wide operating margin of over 75%, it can easily afford to do that.
It also has a good record of increasing profits, which means more cash for investors. In its most recent set of results, ASX made a net profit of nearly $200 million from revenue of $350 million for the six months to December 31, 2013. This was a 4.7% increase on the previous period, which itself was a 10.8% increase! These are the sort of figures that make Foolish investors smile.
There is also the option of taking part in the dividend reinvestment plan to increase your holdings without paying additional brokerage costs.
Another important point to consider is that with the compulsory superannuation contribution level increases, more money will be pouring into stocks, which means more revenue for ASX.
Finally, ASX has no debt. This means that there is plenty of cash in the coffers, which can either be used to ride out rough periods or can come straight to you.
Now, having said all that, ASX is fairly expensive at just under $41 per share, with a price-to-earnings ratio of 19.89. Compared with both the market and the diversified financials sector, that's expensive no matter how you slice it. With rock solid fundamentals though, it's certainly worth taking a closer look.
Foolish takeaway
While buying now is certainly an option, the best move for investors may be to wait for a pull back before dipping in.
