3 blue-chip alternatives to CBA shares for MORE passive income

These blue-chip stocks look like appealing dividend picks.

| More on:
Blue chip in a trolley with a man pushing it.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Currently, Commonwealth Bank of Australia (ASX: CBA) shares may not appeal as much for dividends considering its current dividend yield is now just 3% (fully franked).

One of the most useful metrics to measure a bank is the price-to-book ratio – its valuation compared to the balance sheet. Investors can supposedly do well with a bank if they buy it at a price-to-book ratio of around 1, according to an old school rule of thumb. In these times, perhaps a ratio of roughly 1.5 would be good for a quality bank.

According to the broker UBS, CBA shares are trading at a price-to-book ratio of well over 3x.

ASX blue-chip stocks can be excellent choices for passive income. However, for investors wanting to own some of the largest ASX blue-chip stocks but not CBA, I think the below three businesses could be better.

Coles Group Ltd (ASX: COL)

As one of the largest supermarket businesses in Australia, it serves many customers. We all need to eat, right?

Coles has very defensive earnings, in my view. Australia's population and inflation are both long-term tailwinds for the company's sales. In the FY25 first quarter, the company reported total sales growth of 2.9%, with supermarket sales growth of 3.5%.

It has grown its dividend every year since 2019 and currently has a fully franked dividend yield of 3.8%.

With Coles continuing to invest heavily in its supply chain with automated distribution centres, I think the company can become more efficient and continue growing its bottom line.

Woodside Energy Group Ltd (ASX: WDS)

This may be a controversial choice, considering the ASX energy share has sunk close to 40% since 15 September 2024, and the dividend is decreasing.

However, the share price has declined so much that the future dividend yield has been boosted. The world continues to need energy, including LNG, so I think this could be a cyclical opportunity to buy this ASX blue-chip share.

While I wouldn't choose to commit to owning Woodside shares forever, I think it's an underrated medium-term play at the moment, particularly with its pipeline of new projects in both hemispheres.

According to the forecast on Commsec, it could pay a fully franked dividend yield of 8.25% in FY25.

Telstra Group Ltd (ASX: TLS)

Telstra is by far the largest telco in Australia, which gives it an advantage to buy more spectrum than rivals, invest the most in its telco infrastructure, spend the most on advertising and so on.

The company is adding hundreds of thousands of new mobile users to its subscriber base each year, which increases revenue and spreads the ASX blue-chip stock's fixed costs over more subscribers (leading to increased profit margins). Net profit can keep growing thanks to these trends.

Telstra has been growing its annual dividend for the last few years. In FY24, the business paid an annual dividend per share of 18 cents, which translates into a fully franked dividend yield of 4.6%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group and Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Close-up of a business man's hand stacking gold coins into piles on a desktop.
Dividend Investing

Here's how I would build a $100,000 dividend portfolio for maximum passive income today

These ten stocks will pay you handsomely to own them...

Read more »

An older executive man dressed in suit trousers and a white shirt sits against a wall smiling with cash rains down over him representing dividend shares like BHP, FMG and Newcrest paying dividends in retirement
How to invest

How you can earn $10,000 a year in passive income from a $10k ASX 200 investment today!

Looking to boost your retirement with an extra $10,000 a year in passive income. Read on...

Read more »

A smiling woman holds a Facebook like sign above her head.
Dividend Investing

Bell Potter names the best ASX dividend shares to buy in June

Bell Potter thinks these are among the best shares for income investors to buy right now.

Read more »

a man leans back in his chair with his arms supporting his head as he smiles a satisfied smile while sitting at his desk with his laptop computer open in front of him.
Dividend Investing

With a 5% dividend yield, why I think this leading ASX share is a buy

I think this business offers pleasing income with potential capital gains too.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

3 top ASX dividend shares for income investors to buy

Analysts have good things to say about these income options.

Read more »

Woman smiling whilst shopping in a clothing store.
Dividend Investing

Why this quality ASX 300 dividend stock is tipped to surge 54%

A leading fund manager forecasts significant outperformance from this quality ASX 300 dividend stock.

Read more »

Man smiling at a laptop because of a rising share price.
Dividend Investing

Why this is one of my top ASX dividend shares to buy in June

This ASX dividend share provides everything I’m looking for.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Dividend Investing

Forget Westpac and buy these ASX dividend shares

Let's see what analysts are saying about these income options.

Read more »