The Best ASX Blue chip Stocks
to buy Now In September 2024

As one of the world's largest mining companies by market capitalisation, BHP (ASX: BHP) is a major player in the mining industry. The company operates across several continents, with significant operations in Australia, South America, and Papua New Guinea. BHP Group has a diverse portfolio, including iron ore, metallurgical coal, copper, and oil.

This diverse portfolio reduces the risk of individual commodities impacting the share price but also minimises any upside from short-term increases in these commodities. But crucially, the demand dynamics for iron ore and copper are strong in the long term. This makes it a standout amongst ASX mining stocks.

In FY24, the company generated US$55.7bn in revenue (up 3%), an attributable profit of US$7.9bn (down 39%) and an underlying attributable profit of US$13.7bn (up 2%). The difference between the two profits can be explained by the US$2.7bn impairment of its WA nickel assets and a US$3.8bn charge related to the Samarco dam failure, although these figures were partially offset by a US$0.7bn gain on the disposal of its Queensland coal assets.

If you're looking for dividends, BHP is worth considering. Although commodities stocks are volatile, BHP has a diversified portfolio of assets. With this and the company's promise to pay out at least 50% of its earnings in dividends, the company is one of the top dividend stocks. The company paid US$1.46 (A$2.15) per share in FY24, making its total cash returns to shareholders US$7.4bn (A$10.9bn).

In terms of diversification into exploration and production, operationally efficient BHP is in a better position to withstand any market volatility. These commodities are in high demand at almost all times. Therefore, the target zones of the company – copper, iron ore, and coal serve as a solid ground for the stability in revenues. What is more, BHP’s recent record of iron ore, whereby prices outperform expectations, suggests strong prospects of this company making profits.

The demands of key international markets, especially big economies such as China, greatly affect BHP’s performance. Also, given that some analysts are expecting higher iron ore prices as well as potential fiscal stimulus adding to increased steel demands, BHP should gain from such macroeconomic conditions.

The Commonwealth Bank of Australia (ASX: CBA) is a classic example of a quality blue chip investment – ideal for those looking for consistent returns and financial stability.

CBA remains operationally stable to date even under margin pressures in the banking sector. Despite the adverse economic climate, it has maintained a consistent cash NPAT of ~$10bn over the last 3 years, which demonstrates its operational effectiveness. It paid $8bn in total returns through buybacks and dividends. It paid $4.86 per share in dividends in FY24, representing 79% of its profit.

The bank has an outstanding CET1 ratio of 12.3%, indicating strong financial resilience on the part of the institution.

Another thing that makes CBA special is that it puts a lot of attention to the maintenance of strong credit quality. Despite this, the bank portrays itself as a good risk manager because it has managed arrears that are relatively small compared to other banks; and this is a vital trait in a volatile economic environment. It also has a lower portion of its home loans sourced from brokers, thus avoiding paying trailing commissions to the extent its peers have to.

CSL is the ASX's largest healthcare stock. The company has a proud history, enabling many of the 20th century medical advances to reach our shores such as insulin, penicillin and flu vaccines. It was privatised and publicly listed in 1994 at $2.30 a share, although it undertook a three for one share split in 2007 making its IPO price 76.7c in real terms, meaning it has been more than a 300-bagger since listing!

CSL, has two primary businesses: flu vaccines and blood products – it takes plasma from donors and turns it into life-saving therapeutics, particularly immunoglobin products. Plasma is the substance that carries red and white blood cells through the body – these therapies are relevant for disorders such as hemophilia, primary immune deficiencies, hereditary angioedema and inherited respiratory disease.

CSL investors have had 3 major concerns about the stock. First that US$11.7bn was too much to pay for Vifor, which CSL acquired in late 2021. Second, the increased uptake of Ozempic may threaten its future markets - because if you reduce obesity, you reduce healthcare problems that CSL's products aim to treat. Third, margins being under pressure. Nonetheless, the company is expecting double-digit earnings growth for the rest of the decade and has told investors to be patient with Vifor. As for Ozempic, even if it does reduce obesity and health problems that come with it - it may not help people that already have the disease.

CSL just released its FY24 results. It delivered US$14.8bn in revenue and a $2.9bn post-tax profit, both up 11% from FY23. It paid a total dividend of US$2.64 per share, or A$4. The biggest contributor was the Behring segment which delivered US$10.6bn in sales, $5.7bn of which came from its Immunogobulin products including Privigen and Hizentra.

Analysts covering CSL have a mean price of A$317.62, a figure 7% higher than the current share price. They call for $15.8bn in revenue and $6.75 EPS for FY25 (or a $3.27bn profit) which would be in line with the company’s expectations. For FY26, $17bn in revenue (up 7.6%) and $7.81 EPS or a $3.8bn profit (up 16%). The company is trading at 7x EV/Sales, 20.3x EV/EBITDA, 29.2x P/E and 2.1x PEG – all hefty multiples for an ASX company.

We think investors who hold for 10-20 years won’t be disappointed in buying CSL now. However, it won’t generate ‘quick’ returns, so those investors shouldn’t buy CSL. One forthcoming catalyst may be sales from HEMGENIX, the first ever FDA-approved gene therapy for hemophilia B, that is one of the world’s most expensive drugs, costing US$3.5m. Although a new drug won’t be as much of a catalyst for a share price spike than it would be with a clinical stage biotech with just one or two assets.