There are few shares I plan to hold for more than a decade, but there are 2 ASX shares I plan on owning until I’m 100.
Here are the two I’m talking about:
Rural Funds Group (ASX: RFF)
Rural Funds is a real estate investment trust (REIT) that purely invests in agricultural properties. Its properties are spread across a number of industries including almonds, cotton, macadamias, cattle, poultry and vineyards.
The reason why I plan to own Rural Funds for many decades to come is the useful life of farmland. Food has been grown on farms for many centuries and I’m sure farmland will be useful for the rest of my lifetime.
Farmland requires little ongoing expenditure by the landlord compared to office buildings or shopping centres, which should mean better long-term returns. However, the capital expenditure that Rural Funds does do improves the productivity & value and therefore increases the rental income.
Rural Funds management predict that the distribution can increase by at least 4% a year over the long-term. Although this isn’t an amazing growth rate, it should beat inflation comfortably over the coming decades. I’d be happy with that.
It’s currently trading with a distribution yield of 4.9%.
InvoCare Limited (ASX: IVC)
The sad and morbid reality is that a certain number of people die every year, providing funeral business InvoCare with an almost guaranteed level of revenue and earnings annually. Even if the number of deaths decreases InvoCare should still generate a good level of profit – it’s a very defensive business.
Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. There appears to be possible underlying growth for InvoCare for at least the next 32 years, although it’s slow predicted growth.
InvoCare is also investing in its locations to modernise them and make them celebratory. Another tactic for it is to open retail storefronts in surrounding suburbs to win more business to send to InvoCare funeral homes. Management believe this could lead to sustainable earnings per share (EPS) growth of 10% per year.
It’s currently trading at 22x FY19’s estimated earnings with a grossed-up dividend yield of 5.5%.
These two shares are not cheap, nor are they likely to generate the biggest returns. However over the next decade, or five decades, I think there’s a very good chance they will generate reliable returns. I’m close to buying more of their shares for my portfolio.
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Motley Fool contributor Tristan Harrison owns shares of InvoCare Limited and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia has recommended InvoCare 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.