Finding great ASX shares can be difficult, but that's only half the challenge. The other half is holding onto great companies through good times and bad, to allow the magic of compounding increase your net worth.
This has become harder recently as there are plenty of great technology and innovation companies that fly past like meteors. However, there are still many companies that will deliver consistent growth, and consistent dividends. The secret is to buy them at a great price and hold onto them as they grow.
Resource ASX shares
The iron ore industry has been the great constant in my life. It started before I was born, grew with me, and will be raging long after I am gone. As a result, I started purchasing shares in Fortescue Metals Group Limited (ASX: FMG) at approximately $8 per share. Today, my average dollar cost is around $10 per share. This means I was able to secure a high dividend paying share at a low price.
The company has a good future. It is in the finishing stages of developing two high grade iron ore mines, and selling into a market where demand is very strong. In addition, the company operates on solid operating margins. However, Fortescue is also expanding its metals portfolio. It recently announced a joint venture to explore part of the Paterson's province in Western Australia for gold. Along with a number of exploration activities in South America for gold and copper.
Fortescue is selling at a price to earnings ratio (P/E) of 7.73, which is just under half of BHP Group Ltd (ASX: BHP). At this price it has a trailing 12-month (TTM) dividend yield of 10.86%.
Finding solid resource investments like this in the early stages can be difficult. Right now, I think that two companies with potential for solid growth are Base Resources Limited (ASX: BSE), and maybe Ecograf Ltd (ASX: EGR).
Real estate
After the coronavirus market rout in March, I started to buy shares in Centuria Office REIT (ASX: COF). The company is a real estate investment trust (REIT), thus there are laws governing transparency and how much it has to pay out in distributions. I like this REIT for a few reasons.
First, it is the country's largest pure play office REIT. This means it is not diversified and directs all of its resources into commercial buildings. This sector has been quite resilient to COVID-19 in general, but more so for Centuria Office REIT. That is because many of the company's tenants are government departments. Second, it has a long weighted average lease expiry, currently 4.7 years.
Right now the company is paying a TTM dividend yield of 8.48% and has a P/E of 12.6. I have no intention of selling this as it is a high paying dividend ASX share which forms part of my passive revenue streams.
Other companies that are similar right now include DEXUS Property Group (ASX: DXS), and Abacus Property Group (ASX: ABP).
