Foolish investors (with a capital F) are constantly looking for companies that will be great performers over the long term, delivering both capital gains and dividend income to grow wealth. While share prices for the best companies are certainly higher than they were a couple of years ago, there are still a number of big companies out there that offer great long-term value.
I believe the companies with the brightest futures are those with good growth plans and a history of delivering solid shareholder returns, be that by capital, earnings, or dividend growth. Here are my favourites:
Crown Resorts Ltd (ASX: CWN) is one of my favourite companies around at the moment. They have a huge growth pipeline ahead of them, including a new hotel complex in Perth, an update to its flagship Melbourne Casino, a new luxury complex in Sydney, a casino in Sri Lanka, and plans for new casinos through Asia via its Melco Crown joint venture. These should boost the share price in the coming years and further down the track deliver a great dividend yield.
Woolworths Limited (ASX: WOW) and Wesfarmers Ltd (ASX: WES) are two companies every Australian will know of through the Woolworths and Coles grocery chains. These two companies are spending $2 billion to open over 170 new stores around Australia in order to further boost market share and pressure the smaller players. Woolworths can also grow through improved performance of its new Masters Hardware chain, while Wesfarmers is in the process of consolidating the business by selling off its insurance business. This, and other initiatives, should boost return on equity over time so that the company can deliver superior returns to investors.
ResMed Inc (ASX: RMD) is one of the most consistent performers on the Australian Stock Exchange. ResMed has grown revenue in all but one of the past 10 years, and profit in all but two, however the share price is only 50% up over 10 years, and flat over the past five years. This is despite the company delivering an 80% increase in profit and 40% jump in revenue over five years. Investors are a little concerned that the new healthcare rules in the U.S. will hit profits, however RedMed’s solid market share and history of innovative new products should see the company fare better than most under the new rules.
Long-term investors should look for companies with great growth outlooks, as well as a history of being able to achieve those targets. The four companies above have strong histories, dominant market shares, and the management teams to deliver terrific shareholder returns over the next 10 years!