Forget term deposits! I’d buy these two ASX 200 shares instead

The S&P/ASX 200 Index (ASX: XJO) share space is a great place to find passive income ideas that could be better picks than term deposits.

ASX blue-chip shares can be a bastion of reliability because of the essential nature of their products and services. I’m going to talk about two of the most important businesses for the Australian economy, and why I think they’re top buys today.

I’m expecting both of the below companies to continue growing their earnings and payout in the coming years.

Coles Group Ltd (ASX: COL)

Coles is Australia’s second largest supermarket business, while also operating a large liquor segment, which includes Liquorland.

The company has delivered significant revenue growth over the last several years and yet it has managed to continue delivering solid revenue growth.

In the FY26 half-year result, Coles reported total revenue growth of 2.5%, operating profit (EBIT) growth of 10.2% and underlying net profit growth of 12.5% to $676 million.

Additionally, in the first seven weeks of the third quarter of FY26, supermarket sales were up 3.7% (or 5.3% excluding tobacco).

Food is an incredibly important part of life and Coles is an essential provider of that, making its earnings very defensive, in my opinion.

The ASX 200 share’s margins could continue rising as it utilises its new advanced warehouses to being more efficient with its own inventory and sell more online to customers.

In the FY26 half-year result, it increased its half-year payout by more than 10% and it currently has a grossed-up dividend yield of 5.1%, including franking credits, at the time of writing. Its payout has increased every year since 2019.

Telstra Group Ltd (ASX: TLS)

Telstra is another ASX 200 share with impressive credentials that makes it more appealing than a term deposit.

The business has an incredibly important telco network that is used for all purposes like work, education, entertainment, communication, online shopping, online banking and more.

I think Telstra has very defensive earnings, which is being driven by both a rising average revenue per user (ARPU) as well as a growing number of users (with both Telstra subscribers and wholesale).

The business is working hard to stay ahead of competition by investing further in its 5G network and building fibre cables. This can help it grow earnings in the coming years, particularly if it continues with inflation-linked price increases for mobile customers.

Telstra has hiked its annual dividend per share each year since 2021, meaning it is building a pleasing record of passive income growth. In the FY26 half-year result, it grew its interim dividend per share by 10.5% to 10.5 cents. That translates into an annualised grossed-up dividend yield of 5.75%, including franking credits, at the time of writing.

I believe Telstra could be one of the most defensive businesses to own over the next few years.

The post Forget term deposits! I’d buy these two ASX 200 shares instead appeared first on The Motley Fool Australia.

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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 Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.