While many of us enjoy following and researching different individual shares, it’s also nice to put a good stack of your wealth into something you don’t have to think about so much.
Into investments that require little to no monitoring and you can be confident in their ability to deliver long-term compound growth.
Here are two choices where I think it’s possible to do just that…
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
This family run investment conglomerate has been listed since 1903. That in itself is quite an achievement. But Soul Patts also has an impressive track record of shareholder returns.
The business has expanded over the years from a small chemist into a diverse investment company worth over $5 billion. Soul Patts own large stakes in a long list of companies from a range of industries, including mining, financial services, telecommunications, and health care, as well as owning real estate and a portfolio of listed equities.
The company has compounded shareholders wealth at a very strong rate for decades. Over the last 40 years, shareholders have received a return of 16.4% per annum, as well as a regularly increasing dividend.
Given the company’s spread of Aussie businesses I feel comfortable holding this as a ‘bottom drawer’ stock for the long term.
In my view, it’s one of the best businesses on the ASX. Soul Patts currently trades on a grossed-up dividend yield of 3.3%.
MFF Capital Investments Ltd (ASX: MFF)
Another compounding machine is this LIC, previously known as the Magellan Flagship Fund. This company focuses on holding a basket of businesses, almost entirely US shares, which it thinks have above average earnings growth potential, while trading at attractive valuations.
This LIC is aiming for long-term compound capital growth. It pays a small dividend, which it aims to increase in the coming year, but most profits are reinvested back into the portfolio to create additional compounding.
The portfolio contains many familiar US names, like Facebook, Alphabet (Google), Visa and Mastercard, amongst many others.
MFF Capital Investments has certainly been compounding shareholders money at a decent rate. Over the last 10 years, investors have received a total shareholder return of 17.4% per annum, and 49% over the past year alone.
These two holdings would compliment each other quite well, in my view. A large investment business focused on Aussie companies, and an international-focused LIC which owns many large and dominant global companies. I think both are worth considering for set-and-forget, long-term compound growth.
You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!
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Motley Fool contributor Dave Gow owns shares of Magellan Flagship Fund Ltd and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company 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.