S&P/ASX 200 Index (ASX: XJO) shares are a great hunting ground to find good opportunities for your portfolio.

To get into the ASX 200 a business must have already shown a sustained period of growth or stability.

There are some very large ASX shares like Westpac Banking Corp (ASX: WBC) and Telstra Corpoation Ltd (ASX: TLS) which are popular but I don’t think they have a lot of growth potential. They are mature businesses which already command a large market share. 

Instead, I think these ASX 200 shares would be good picks next week for the long-term:

Share 1: InvoCare Limited (ASX: IVC)

The funeral operator has seen its share price decline by 24% since the start of its COVID-19 decline. It’s a morbid idea but I think it has solid return potential.

InvoCare has been affected by COVID-19 this year. There’s no doubt about that. The restrictions on funeral numbers will reduce FY20 earnings. But thankfully Australia has only had a small number of coronavirus deaths compared to many other countries.

This probably means that the actual 2020 death rate will be similar to the projected death rate. Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. This is a powerful long-term tailwind. 

Indeed, there may even be less deaths in 2020 because of impacts like increased personal hygiene. This is a good thing for the country and for families. For InvoCare, it’s a delay of funeral numbers. But not lost entirely.

The ASX 200 share has a solid dividend record. I think good dividends will continue to flow from InvoCare in future years. With InvoCare, I think investors could see solid total returns with a good dividend yield and steady earnings (and hopefully share price) growth. Its capital raising also improved the strength of the balance sheet.

Interest rates are now incredibly low so bond-like businesses such as InvoCare theoretically should be valued higher.

It’s priced at 19x FY22’s estimated earnings.

Share 2: Brickworks Limited (ASX: BKW)

In my opinion, there are few ASX 200 shares that make more sense than Brickworks in book value terms.

Brickworks currently has a market capitalisation of $2.29 billion. Its industry property trust stake is worth $710 million (growing) and its shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is worth $1.84 billion. Those two divisions have a combined pre-tax value of $2.55 billion.

I like that Brickworks’ dividend is entirely supported by the cash flow paid by those two assets.

However, the rest of the business is also exciting for the long-term. Brickworks recently acquired three brickmakers in the US. That strategy now means that Brickworks is the leading brickmaker in the northeast of the US. America is a huge market and there’s plenty of long-term growth potential for Brickworks, particularly with efficiency gains.

The ASX 200 share is best known for its Australian building product subsidiaries. Bricks, paving, masonry, precast, roofing – it sells a lot of different products.

COVID-19 is probably going to cause the Australian construction sector to have a tough year. But construction is usually cyclical. When immigration returns there is likely to be a bounce back of activity, which would be beneficial for Brickworks. The $25,000 HomeBuilder scheme could also help Brickworks in the shorter-term.

A bonus with Brickworks is that it has one of the best dividend records around. It hasn’t cut its dividend for over 40 years. I think the grossed-up dividend yield of 5.5% looks attractive to me.

Foolish takeaway

I really like the look of both of these ASX 200 shares. Many others may be too expensive considering all of the COVID-19 uncertainty. At the current prices I’d probably go for Brickworks because of its defensive property and investment assets. But I’d happily buy both next week.

More reading

• Why I’m desperate to add CSL and 2 other ASX shares to my portfolio in 2020
• What are the best ASX shares for dividends?
• Top brokers name 3 ASX 200 shares to sell today
• Forget bank interest, try these ASX 200 dividend shares!
• Why G8 Education, InvoCare, Megaport, & Webjet shares are tumbling lower

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended InvoCare Limited. 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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Interest rates look set to remain at historic lows, at least for the next few years. So, keeping your money in a high-interest savings account or a term deposit will barely keep up with inflation. Maybe you’re currently in or nearing retirement, or maybe you are still working and just looking for a handy way to supplement your income stream?

Either way, here are 3 blue chip ASX shares to consider for strong dividend yields: Macquarie Group Ltd (ASX: MQG), Wesfarmers Ltd (ASX: WES) and Telstra Corporation Ltd (ASX: TLS).

All 3 of these companies pay attractive dividends and are well-positioned for long term growth.

Macquarie

Macquarie is a global financial services business with a core focus on international investment banking.

In terms of ASX listed blue chip shares to select from, I definitely prefer Macquarie over Australia’s big 4 major banks: Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB) and Australia and New Zealand Banking GrpLtd (ASX: ANZ).

I’m more attracted to Macquarie due to the quality and diversity of its earnings base. In particular, it is less exposed to downturns in the local residential property market. It could be quite a rocky road ahead for this sector over the next few months.

Macquarie currently provides investors with a forward fully franked dividend yield of 3.59%.

Wesfarmers

Wesfarmers is a highly diversified business. It has operations in retail segments including general merchandise and office supplies. It also has exposure to the industrial sector with operations in energy and fertilisers, and industrial and safety products.

This high level of diversification across a broad spectrum of the Australian economy is the core strength of this blue chip ASX share.

Wesfarmers business performance during the coronavirus pandemic has been stronger than most. It revealed in early June that it has experienced particularly strong demand from both its Bunnings and Officeworks stores.

Also, Wesfarmers offers investors a forward fully franked dividend yield of around 3.55% right now.

Telstra

Another blue chip ASX share I would consider buying now for strong dividend yield is Australia’s largest telco provider, Telstra. It currently offers investors a handy forward fully franked dividend yield of around 3.1%.

Telstra has been restructuring into a leaner company, so it can remain in a dominant no. 1 market position. Telstra also has had to absorb increased investments in its 5G network to gain an upper hand in this emerging market. However, these investments are now paying off. It is currently a world leader in terms of 5G network rollouts.

I believe that 5G could be a real game-changer for Telstra. The 5G network has the potential to offer even faster broadband speeds than the NBN.

More reading

• 2 blue chip ASX 200 dividend shares to buy next week
• What is the price/earnings (p/e) ratio?
• The ASX big bank stock with the best forecast dividend yield for the new year
• Australian retail sales up 16.3% in May
• Brokers just upgraded these ASX 200 stocks to “buy” today

Motley Fool contributor Phil Harpur owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Telstra Limited, and Westpac Banking. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Telstra Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. 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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The potential for further stock price declines after the recent market crash may dissuade some investors from buying high-quality businesses today.

However, predicting the stock market’s performance over a short time horizon can be problematic due to the wide range of inputs that can affect its prospects.

Therefore, buying companies while they offer wide margins of safety could be a shrewd move. They may be able to deliver impressive performance in the coming years.

Predicting a stock market crash

Trying to forecast when a market crash will occur is exceptionally difficult. For example, the recent pandemic was an unprecedented event that was not on the radar of the vast majority of investors. Trying to predict what happens next when risks such as a possible second wave and geopolitical challenges between the United States and China are ongoing may prove to be an equally difficult task.

Other crises such as the global financial crisis were also not foreseen by many investors. And, perhaps more importantly, the scale of recovery from them was not anticipated by most investors while the economic outlook was at its worst and stock prices were at their most attractive.

Buying undervalued stocks

Therefore, predictions about the prospect of a further market crash may prove to be of little value in the coming months. By contrast, a strategy that focuses on buying the best-quality companies in an industry that faces an uncertain future could be highly profitable. They may be in a strong position to survive a period of economic difficulty, and could even seek to expand their market positions through taking market share away from competitors.

Moreover, even if the stock market experiences a further downturn, its recovery prospects appear to be bright. The stock market has been able to produce annualised total returns in the high-single digits over the long run. It has also successfully recovered from even its very worst bear markets to rise to new record highs. Therefore, a strategy of purchasing stocks and holding them for the long term is likely to yield a higher return that that on offer via other mainstream assets – especially since interest rates are expected to remain low over the medium term.

Portfolio management

Of course, investors may wish to hold some cash over the coming months in case there is a market crash. Doing so may provide them with the opportunity to capitalise on short-term mispricings among high-quality companies.

However, in many cases, stocks appear to include wide margins of safety at the present time that reflect the risks they face during an uncertain period for the world economy. Buying a diverse portfolio of them now and holding them through what could prove to be a volatile period for stock prices may lead to high returns that improve your long-term financial outlook.

More reading

• 2 blue chip ASX 200 dividend shares to buy next week
• What is the price/earnings (p/e) ratio?
• 2 great value ASX 200 shares I’d buy next week
• Consider these blue chip ASX shares for strong dividend yields
• How to turn $20,000 into $250,000 in 10 years with ASX shares

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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