The best holding period for ASX shares is preferably forever.
If you can hold a decent ASX share forever it means less transaction costs, less thinking about where to put your money and less capital gains tax events.
Here are two of the best candidates to hold forever on the ASX:
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is an investment conglomerate that has been operating for over a century. It has already proven that it has excellent staying power. The fact that it’s an investment house means it can invest in whatever assets it likes, which means it shouldn’t become irrelevant over time.
I find it very easy to think long-term about Soul Patts because the management themselves think and invest for the long-term. Previous tiny investments have turned into huge holdings for the company with shares like TPG Telecom Ltd (ASX: TPM) and New Hope Corporation Limited (ASX: NHC) starting from humble beginnings and turning into big industry players.
Soul Patts funds its dividend purely from the cashflow it receives, allowing for re-investment into more opportunities with the retained cash.
It currently has a grossed-up dividend yield of 3.6%. It’s currently trading at around its stated pre-tax value.
Rural Funds Group (ASX: RFF)
Farmland has been useful for centuries and it’s hard to imagine that changing for the foreseeable future.
Even so, Rural Funds has employed a useful diversification strategy of acquiring farms in different sectors and different climactic conditions. The farm types include cotton, almonds, vineyards, macadamias and cattle which are spread across several states.
The real estate investment trust (REIT) treats its tenants as partners by making useful productivity investments at the farm locations (by withholding around 20% of the net cash rental profit each year). It’s this re-investing into the farms and receiving additional rent that allows management to forecast that the distribution can grow by 4% each year.
Rural Funds currently offers a FY20 distribution yield of 6.3%. It’s trading at a slight discount to its stated underlying value.
I think Rural Funds is a solid long-term option at the current price, but Soul Patts seems like it could be one of the best long-term buy-and-hold shares on the ASX with its diverse assets and long-term focused & aligned management.
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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. 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.