I think it’s time to buy the diversified property S&P/ASX 200 Index (ASX: XJO) share Brickworks Limited (ASX: BKW).
The ASX 200 has plenty of quality shares that would make good long-term investments for most portfolios. An added bonus from owning Australian shares is that franking credits are attached to the dividends that are paid.
I think it’s time to buy Brickworks for these reasons:
Low share price
One of the most important parts of investing is buying that asset at a good price. Due to the coronavirus the Brickworks share price has fallen 34% since 20 February 2020. Having the option to buy this great long-term focused ASX 200 share is very attractive right now.
There are some shares that are priced a lot cheaper at the moment because of potential wipeout risk. Think how bad it could get for the banks if bad debts get significantly worse. But I don’t think the Brickworks share price decline is warranted considering its long-term prospects.
Good dividend for an ASX 200 share
One of the main things that ASX 200 share investors look for is a decent dividend. I don’t think banks like Westpac Banking Corp (ASX: WBC) can be relied upon for income. But Brickworks has a great record. It hasn’t cut its dividend for over 40 years. I think that’s a fantastic record.
It’s not just the reliability that I like though. The grossed-up dividend yield is really attractive at 6.6%. The falling share price has boosted the starting yield for investors.
Diversification
One of the main reasons I’m confident about Brickworks for the future as an ASX 200 share pick is the diversification of its business.
Most people will think of Brickworks for its Australian building products divisions that supplies the country with bricks, paving, roofing, precast and so on.
But there are other parts to the business that should be regarded just as well. Its American building products business is just getting started after a few acquisitions. The US is a huge market with plenty of growth potential.
It also has two defensive assets – its ‘investments’ divisions and the 50% stake of its industrial property trust that it owns along with Goodman Group (ASX: GMG). Both of these provide defensive earnings and good cashflow.
Foolish takeaway
I think Brickworks is one of the best ASX 200 shares to choose right now. Its shorter-term construction income looks uncertain and bleak – which is precisely why the share price is down so much. When things start improving the share price will probably go up too, much sooner than we see a recovery in the earnings.
Brickworks isn’t the only ASX 200 share I’d buy today. I’d also love to add these great ASX 200 shares to my portfolio.
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Returns as of 7/4/2020
More reading
- These ASX 200 shares are up over 40% in 2020
- 5 things to watch on the ASX 200 on Monday
- ASX 200 up 0.25% this week, CBA reveals Q3
- Top brokers name 3 ASX 200 shares to sell next week
- Why BHP is an ASX 200 dividend share to buy today
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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