If I was lucky enough to receive a Christmas bonus, or have a spare $2,000 burning a hole in my pocket, I would be looking to invest it into ASX shares.
Investing your savings into quality ASX shares will reward you over time. Additionally, it stops you from spending that money on useless fads. I find this a great way to save. It’s easier to not spend your money when it’s invested in shares, not to mention that shares have the ability to provide capital growth, and most also pay out a healthy dividend that would beat that low interest term deposit.
Below are 2 ASX shares I would be happy to invest my savings into today.
Rural Funds Group (ASX: RFF)
Real estate investment trust Rural Funds Group is still sitting around 28% below its share price high from mid last year, thanks to the allegations made by short seller firms Bonitas and Bucephalus. However, Rural Funds has refuted all short-seller claims and conducted independent valuations and audits. Since then, investor sentiment has been returning, however Rural Funds’ shares still trade below where they have historically when compared to the company’s net asset value (NAV).
Rural Funds has consistent portfolio objectives to grow its adjusted funds from operations through lease indexation, reinvestment and market rent reviews. In addition, management plans to grow its dividend by 4% per year and increase sector and climatic diversification, liquidity and scale. These dividend increases have been forecast thanks to Rural Funds’ 11.3 year weighted average lease expiry on its assets, which gives it some long-term earnings stability. In addition, most of these leases are structured to increase with CPI, or a fixed indexation with market review.
I like Rural Funds today thanks to its suppressed share price, diversified portfolio of assets and increasing dividend. The company’s forward dividend is currently yielding 5.6%.
WAM Leaders Ltd (ASX: WLE)
The second company I would consider is WAM Leaders, a listed investment company (LIC). LICs are a great way to gain diversification in a single trade and access to managements expertise.
Today, I would consider following Geoff Wilson, the chief investment officer at Wilson Asset Management who recently increased his holding in WAM Leaders. This LIC focuses on undervalued growth companies within the S&P/ASX 200 (INDEXASX: XJO). Looking at its top 20 holdings, there many well known names such as Westpac Banking Corp (ASX: WBC), Woolworths Group Ltd (ASX: WOW), Telstra Corporation Ltd (ASX: TLS) and CSL Limited (ASX: CSL).
WAM Leaders is currently trading at a slight discount to its pre-tax net tangible assets (NTA). Given the portfolio’s outperformance history and that of the other WAM portfolios I believe it to be good value today. It also currently pays a trailing grossed-up dividend of 6.3%.
I think either or both of these companies offer good value at today’s prices. To me, investing in these companies is a far better use of that spare $2,000 than leaving it sitting in a bank account or spending it on something you will have forgotten about in 12 months time.
These 3 stocks could be the next big movers in 2020
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Michael Tonon owns shares of RURALFUNDS STAPLED. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Telstra 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.
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