In my opinion, investing in ASX 200 shares is very much a long term game. Here we look at two quality ASX 200 shares that may not have been top performers over the past year in terms of share price gains, but which I believe are both well positioned for above average shareholder returns over the next five years and beyond.
2 ASX 200 shares to buy and hold
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
The Soul Patts share price rallied strongly during 2018, however lost some ground in the first part of 2019. Since then, it has been largely trending sideways, despite a dip in the early phase of the coronavirus pandemic. However, I believe looking back over a longer period provides greater insight into the Soul Patts business model. Over the past 10 years, this ASX 200 share has increased by nearly 60%.
In fact, Soul Patts has a strong, long-term track record of outperforming the ASX index. Also, it has been listed on the ASX for over a century, and has paid a dividend every year in that time.
I am particularly attracted to Soul Patts as an ASX 200 share investment due to its highly diversified business model. The company invests across a broad spectrum of industries, ranging from pharmacies and telecommunications to mining and building products.
Soul Patts also keeps a significant amount of cash on its books. This positions it well to snap up any lucrative investment opportunities that may come its way. With its share price currently trading at well below levels seen in early 2019, Soul Patts is definitely in my buy zone right now.
Blackmores Limited (ASX: BKL)
The Blackmores share price has experienced a downward trend after its lofty heights at the beginning of 2016 when it was trading above $210. It is now trading at $73.15. However, I feel this downward trend needs to be considered within the context of Blackmores’ share price performance during 2015, when it grew at a phenomenal pace. At the beginning of 2015, the Blackmores share price was trading at around half of its current level.
Granted, Blackmores recent financial performance has not been overly impressive. In particular, the company’s operations in China have underperformed. However, Blackmores now has a plan in place to rejuvenate its growth in Asia, particularly in the massive Chinese market. The company is injecting more funds into its South East Asian operations, and will also target the Indian market.
Despite the challenges ahead, Blackmores remains my buy zone. I believe that its Asian strategy holds promise, and with its share price well down on the levels seen at the beginning of 2019, I believe it offers a reasonably good buying opportunity for patient, long-term investors.
Soul Patts and Blackmores are two quality ASX 200 shares that are in my buy zone right now. My pick of the two would probably be Soul Patts, due to its more diversified business model and strong track record of shareholder returns.
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Returns as of 6th October 2020
Motley Fool contributor Phil Harpur owns shares of Blackmores Limited. The Motley Fool Australia owns shares of and has recommended Blackmores Limited 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.
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