Hunting the 100 year stock
By Mike King - May 12, 2012
As the BRW Rich List reminds us each year, a good number of Australia’s wealthiest families are the custodians of a shareholding passed from generation to generation.
Consider the Packer Family, who have passed down properties, media assets and shareholdings. Kerry Packer’s grandfather Robert Clyde Packer owned two Sydney newspapers, which were passed onto his father – Sir Frank Packer – one of Australia’s first media moguls. Kerry passed on his empire to James Packer. You can read more about James’ empire in this article.
Or the Lowy family, which Frank Lowy built up into Westfield Holdings Limited (ASX: WDC) and Westfield Retail Trust (ASX: WRT) from a single humble shopping centre at Blacktown, in Sydney’s western suburbs. Sons, Steven and Peter are now joint chief executives of Westfield Holdings.
Or the Myer family, which opened the first Myer store in 1900, and went on to become the current Myer Holdings Limited (ASX: MYR). The family now run the Myer Family Company, with several Myer family members on the board and have been managing the family’s investments since 1934. According to the BRW rich list, their wealth was estimated at more than $2 billion in 2011.
In each case, the logic is simple. Build a stake in a solid and sustainable business, look after it, and pass it on to the next generation — while enjoying a decent stream of dividends in the process.
While there are obvious questions of tax to consider, there’s nothing to stop any of us building up a stake in a decent business and passing that shareholding on.
And note, here, that I’m talking “business” — and not businesses. Pass on a portfolio, and there will inevitably be trading decisions to be made as companies are acquired or merge — trading decisions that your heirs might get wrong.
Instead, I’m talking about companies with the muscle and clout to be the one that is doing the acquiring or instigating the merger — prosperous survivors, in short, that can grow and throw off dividends over the long term.
And be under no illusion: We are talking about the long term, here — the very long term.
Longevity is increasing sharply. A growing number of people will live to see 100. Even for those that don’t, current estimates of mortality see many of us reaching our late 80s and early 90s.
So, at the very least, it seems reasonable to assume that a share chosen for its intergenerational sturdiness needs to have decent prospects of prospering solidly for a hundred years.
Madness, you might think. How can any business survive and prosper for that length of time — especially in today’s turbulent world, with its fast-changing technologies?
Well many have survived and prospered for that long already — in an era that has seen two world wars, the advent of the motor car and the airplane, the first man on the moon, and the development of the computer.
So which of today’s businesses look set to stand the test of time? One obvious avenue to consider is Australia’s major banks. After all, banking is sometimes referred to as the world’s second oldest profession.
Westpac Banking Corporation (ASX: WBC) is approaching its 200th birthday. Originally established as the Bank of New South Wales in 1817, it was the first bank in Australia. Westpac has seen most of Australia’s history, and still survives to this day.
Australia and New Zealand Banking Group (ASX: ANZ) was established in 1835 as The Bank of Australasia. Only 177 years old.
Not a bank?
Perhaps you’d prefer a company that’s not a bank. How about these four companies?
Washington H. Soul Pattinson (ASX: SOL) is the second oldest listed stock on the ASX, having been listed for more than 107 years. Soul Pattinson is an investment company with holdings in several listed companies including 44% of Brickworks Limited (ASX: BKW), 59% of New Hope Corporation (ASX: NHC), 27% of TPG Telecom Limited (ASX: TPM), plus many other investments as well as a $400m stock portfolio.
BHP Billiton Limited (ASX: BHP) was originally setup in 1885 as a silver, lead and zinc mine in Broken Hill, Australia and listed the same year. Billiton, which merged with BHP in 2001, is even older, having started life in 1860 as a tin mine on a little known island in Indonesia, Billiton (Belitung) island. Will BHP still be digging stuff out of the ground in 100 years? Maybe.
ASX Limited (ASX: ASX) can trace its origins back to 1861 when Australia’s first stock exchange was created in Melbourne, ten years after the official advent of the Gold Rush. Victoria was Australia’s gold mining centre in the 1850’s. Will we still be trading stocks in another 100 years? My guess is yes.
AGL Energy Limited (ASX: AGK) lit the first gas light in Sydney in 1841, and listed on the Sydney Stock Exchange in 1871. Will we still need energy in 100 years? I’m pretty sure we will.
So there you have it, a non-exhaustive list of stocks with origins going back more than 100 years and each with a likelihood of lasting another 100.
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Motley Fool contributor Mike King owns shares in ASX & BHP. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is 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. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691).
A version of this article, written by Malcolm Wheatley, originally appeared on fool.com.
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As the BRW Rich List reminds us each year, a good number of Australia?s wealthiest families are the custodians of a shareholding passed from generation to generation.
Consider the Packer Family, who have passed down properties, media assets and shareholdings. Kerry Packer?s grandfather Robert Clyde Packer owned two Sydney newspapers, which were passed onto his father – Sir Frank Packer – one of Australia?s first media moguls. Kerry passed on his empire to James Packer. You can read more about James? empire in this article.
Or the Lowy family, which Frank Lowy built up into Westfield Holdings Limited (ASX: WDC)…