Overinvested in Coles shares? Here are two alternative defensive ASX stocks

Owners of Coles Group Ltd (ASX: COL) shares have done well over the past year, with a share price rise of 17%, as the chart below shows. After a strong run, it could be an idea to look at adding other ASX defensive stocks to the portfolio to ensure diversification.

In this era of uncertainty, it could be reassuring to own defensive ASX shares pay consistent dividends. I'd count Coles shares as one of those options, but there are also other ideas worth considering, in my opinion.

I'd look for businesses that are likely to experience strong demand even in an economic downturn. This includes the two below.

APA Group (ASX: APA)

This business is one of the largest energy infrastructure businesses in Australia. Energy is essential for businesses and households alike, with gas seen as an important baseload energy source.

APA operates high-pressure gas transmission pipelines and interconnected grids span mainland states and territories. It operates local distribution networks delivering gas to households and businesses in five states and territories, with investments in gas-fired power generation. It also owns several solar and farm assets across Australia, with other renewable projects under development. Additionally, it has electricity transmission assets in different states.

I like that this defensive ASX stock has a diversified energy portfolio. This gives it a much wider set of opportunities to look at to find the best returns for shareholder money.

Over the last two decades, APA has grown its cash flow and distribution significantly thanks to both organic growth and acquisitions the business has made. Impressively, it has grown its annual distribution every year since 2004.

APA is projected to pay an annual distribution of 57 cents per security, which translates into a distribution yield of 7.3%.

Telstra Group Ltd (ASX: TLS)

Australia is becoming increasingly digital, and I think that makes Telstra's telecommunications services more important and capable of producing stronger profits. I believe most households and businesses would place a high importance on their telecommunications bill, making Telstra a defensive ASX stock in my opinion.

The company continues adding over 100,000 new mobile subscribers every reporting period. In the six months to 31 December 2024 it added 119,000 (which represented a 2.5% year over year increase), partly thanks to Australia's increasing population. If it continues growing subscribers, this can help drive the company's profitability higher.

The company reported operating profit (EBIT) growth of 4.1% to $1.8 billion and this helped profit attributable to owners of Telstra shares grow 6.5% to $1 billion. This enabled the company to fund a 5.6% increase of the dividend per share to 9.5 cents.

The last two dividends declared by the business amount to a grossed-up dividend yield of 6.4%, including franking credits.

The post Overinvested in Coles shares? Here are two alternative defensive ASX stocks appeared first on The Motley Fool Australia.

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 Apa Group, 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.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2025