There aren’t many ASX shares I’d be happy to hold until I’m 100.
It would be great if you can find shares that you can hold for the ultra-long-term. It would nullify a few of the negatives that come with investing, such as transaction costs with every trade and paying capital gains tax on the gains you make.
The problem with a lot of shares is that it’s very hard to predict what will happen with their industries in the coming years, which would make holding them for decades potentially a bad choice.
That’s why I like the idea of investing in and holding these two ASX shares for a very long time:
Rural Funds Group (ASX: RFF)
Farmland has been a useful asset for many centuries and it continues to grow in value. So you’d think one of the ASX’s only farmland real estate investment trusts (REITs) would be a good candidate for a very long-term investment.
Growing demand for food and climate change should mean that the underlying value of Rural Funds’ farms keeps going up over the decades. Even if some food is grown differently, farmland will most likely remain the most economical way to produce food.
Rural Funds has a diverse farm portfolio of cotton, vineyards, almonds, macadamias and poultry. All of Rural Funds’ rental contracts have rental increases linked to either CPI inflation or a fixed 2.5% increase.
A lot of Rural Funds’ tenants are listed on the ASX or international stock exchanges, meaning they’re (probably) more reliable for paying the rent than a smaller farmer and have the firepower to invest for growth at the farms.
Rural Funds aims to increase its distribution by 4% per annum and has a projected FY20 distribution of 4.7%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is an investment house which has been going since the early 1900s. The fact that it can change its investments to suit the current (and future) economic conditions and opportunities means it’s very likely to be around for at least the next few decades.
It invests in a large number of companies across a variety of industries like TPG Telecom Ltd (ASX: TPM), New Hope Corporation Limited (ASX: NHC), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API) and Bki Investment Co Ltd (ASX: BKI).
The company invests for the long-term and focuses on businesses with good long-term cashflow. It has very aligned management because they are major shareholders themselves, which I think is an important point because they’re unlikely to take on too much risk with any investment choice or debt.
It also has long-term employees, more than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families.
It currently has a forward grossed-up dividend yield of 3.8%.
I think both businesses are well positioned for the long-term. The only thing I’m a little concerned about is climate-related developments. Lab grown meat could be an issue for Rural Funds’ animal-based farms and Soul Patts’ coal holdings could deteriorate in value if demand for coal falls faster than expected.
These top-quality ASX blue chips could also be candidates to hold in your portfolio for the coming decades.
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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks. 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.