The S&P/ASX 20 (ASX: XTL) is an index made up of the largest 20 businesses in Australia, it's dominated by the big four banks, BHP Billiton Limited (ASX: BHP) and Telstra Corporation Ltd (ASX: TLS).
Most of these businesses have sadly posted dismal results over the last few reporting seasons, with some failing to grow profit by more than inflation.
However there are two companies within the ASX20 that I think could be worth an investment:
CSL Limited (ASX: CSL)
CSL is Australia's largest healthcare company with a market capitalisation of $46 billion. Its main area of revenue is blood plasma products, which are always in demand.
In FY16 it grew underlying revenue at constant currency by 8%, net profit after tax at constant currency by 5% and the dividend by 3% in US dollars. I think CSL has a good chance of continuing to grow over the years ahead thanks to its large research and development budget that it's using for new products and growth.
CSL reports in US dollars so the decreasing Aussie dollar could boost CSL's upcoming results as the US grows its interest rate.
CSL has grown its dividend every year (in Australian dollars) since 2008 making it one of the most reliable dividend payers in the ASX20.
It's currently trading at 25.4x FY17's estimated earnings with a dividend yield of 1.68%.
Macquarie Group Ltd (ASX: MQG)
Macquarie is one of Australia's largest banks with a market capitalisation of $30 billion. It is different to most other financial companies in that it earns around 68% of its revenue from overseas.
It also has changed its revenue mix to more consistent and reliable sources since the GFC, so that it isn't as exposed in the next recession.
It's a growing force in the investment bank world which is pleasing because the more diverse its earnings can be, the better it can withstand any particular obstacle that arises.
In FY16 Macquarie grew operating income by 9%, earnings per share by 23% and its dividend by 21%. It's currently trading at 14.5x FY17's estimated earnings with a partially franked dividend yield of 4.89%.
Foolish takeaway
Both of these businesses should grow faster over the long term than most other businesses in the ASX20.
Out of the two I would buy CSL at today's prices because its price has declined by 17% since July 2016 which presents a good opportunity to buy it at a discounted price. If these two blue chips don't appeal, you should check out our number one pick for 2017 instead.
