There aren’t many ASX200 shares that I believe every investor should own, but I think I have found two:
Altium Limited (ASX: ALU)
Altium is one of the world’s leading electronic PCB design businesses. It’s currently trading at 51x FY19’s estimated earnings after a 22% run-up of the share price over the past month, so I’m not currently advocating it’s a great buy at the current price.
However, I am very attracted to its long-term growth potential with the company trying to achieve total market leadership in the electronic PCB space over the next decade, as Microsoft did in the Office space.
If Altium can win over all the major organisations and businesses with the best software in the market, it could definitely reach its long-term goals with revenue, profit and the dividend growing by double digits every result. I think it’s one of the best ways to get exposure to the growing technological nature of the world.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts might just be my favourite business on the ASX. A difficulty with investing is that each individual business isn’t diverse – you’re investing that parcel into a single bank or telco for example.
With Soul Patts, it is an investment business that takes large stakes in businesses it thinks are long-term opportunities. The fact you get so many different investments such as TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Milton Corporation Limited (ASX: MLT) and Bki Investment Co Ltd (ASX: BKI) is very useful diversification.
Its focused long-term investments have led Soul Patts’ total shareholder returns to outperform the All Ordinaries Accumulation Index over the past year, three years, five years, ten years and fifteen years.
Soul Patts has paid a dividend every year in its history since 1903 and has increased its annual ordinary dividend each year since 2000.
Both of these businesses are very high quality, have a good track record of increasing profits over the long-term and are committed to paying higher dividends over time. At the current prices I’d would rather go for Soul Patts, but if Altium drops to below 40x earnings I’d be interested in buying more shares.
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Motley Fool contributor Tristan Harrison owns shares of Altium 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. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Brickworks and TPG Telecom 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.