Whilst no share is ‘safe’ nor able to avoid volatility, one way you can measure how stress-free your shares are is how well you sleep at night. Or, how often you worry about those shares crashing in value. We are wired to stay away from danger, it’s this psychological effort that helps us to avoid being a crocodile’s snack. However, in the investing game when you try to mitigate losses you can actually ‘lose’ even more by not achieving as big of a return as you could have. That’s why I think the following two shares are good options for…
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Whilst no share is ‘safe’ nor able to avoid volatility, one way you can measure how stress-free your shares are is how well you sleep at night. Or, how often you worry about those shares crashing in value.
We are wired to stay away from danger, it’s this psychological effort that helps us to avoid being a crocodile’s snack.
However, in the investing game when you try to mitigate losses you can actually ‘lose’ even more by not achieving as big of a return as you could have.
That’s why I think the following two shares are good options for a stress-free life. They are lower-risk and have beaten the market:
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Also known as Soul Patts, this business has been around for over a century. It’s an investment conglomerate that takes major stakes in businesses it thinks has promising futures. Its diversification strategy is very effective at reducing risks.
The ability to shift its holdings means it’s flexible and can adapt to changing economic conditions. I can easily imagine Soul Patts will be operating long after I’ve checked my portfolio for the last time.
Over the past 15 years Soul Patts has delivered a total shareholder return of 13% per annum, outperforming the S&P/ASX All Ordinaries Accumulation Index by 3.6% per annum according to its just-released report.
One of the most pleasing aspects about Soul Patts is that it has increased its annual ordinary dividend every year for the past 18 years, including through the GFC.
It currently has a grossed-up dividend yield of 3.2%.
Magellan Global Trust (ASX: MGG)
This is a listed investment trust (LIT) run by Magellan Financial Group Ltd (ASX: MFG).
It invests in what it thinks are the highest-quality listed businesses in the world. This has resulted in a portfolio full of recognisable names like Facebook, Alphabet (Google), Visa, MasterCard, Oracle and Kraft Heinz.
These businesses aren’t disappearing any time soon, in-fact most of Magellan’s holdings are likely to keep growing at a market-beating rate. Another stress-reducing factor about Magellan’s assets is that a good amount of the portfolio is cash – 20% of the portfolio was cash at the end of August 2018. You can’t get a safer asset than cash in the short-term.
Magellan Global Trust has the growth assets to outperform the index in good times and not fall as hard in a crash due to its safer assets, particularly due to the cash. Since inception almost a year ago, Magellan Global Trust has outperformed the MSCI World Net Total Return Index (AUD) by 1.7% after all ongoing fees and expenses, it delivered a return of around 20% after fees.
Pleasingly, it has an aim to pay a 4% distribution yield of the underlying value per share/unit.
I really like the idea of a stress-free life with shares. That’s why both Soul Patts and Magellan Global Trust are in my portfolio. Although neither of them are cheap at today’s prices, I’d be happy to buy a parcel today and accumulate more on any price weakness.
Another share that could make things stress-free is this top defensive share which is growing, yet would even better if a recession were to occur.
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 Tristan Harrison owns shares of MAGLOBTRST UNITS 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.