There are a few ASX shares in my portfolio that I'm planning to hold forever.
In March 2017, over six years ago, I wrote an article about some of the ASX shares that I owned and planned to hold forever. In this article, I'm going to write about two of those same businesses – I still own them and still plan to own them forever. I'm going to tell you why.
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Rural Funds Group (ASX: RFF)
Rural Funds is still an agricultural real estate investment trust (REIT) that owns a portfolio of farms that it leases out to high-quality tenants.
With its cattle, almonds, cropping, vineyards and macadamias farms, it has tenants like JBS, Australian Agricultural Company Ltd (ASX: AAC), Olam, Select Harvests Limited (ASX: SHV) and Treasury Wine Estates Ltd (ASX: TWE).
The Rural Funds share price has sunk 35% over the past year, which seems like an overreaction to me considering farmland property values are still doing well despite the impacts of interest rate rises.
The Australian and global populations are still growing and will need an increased amount of food. Australian food is usually high-quality and Australia has been described as Asia's food bowl because of all of the food exports. That's a good driver for future farm values, in my opinion. We all need food – I can't see that changing in my lifetime.
Rural Funds' rental income continues to grow, which can offset the higher interest costs. But, it has hedged a lot of its debt to be at a manageable interest rate level.
The ASX share recently released a newsletter to say that "cash profits have recovered and are forecast to increase again next financial year (FY24). Despite the current higher interest costs, RFF has grown rental revenues at a faster rate, primarily through entering a 40-year agreement to lease 3,000 hectares of its macadamia developments."
Rental income growth and attractive distributions make me confident to hold this investment for decades to come.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
This is one of the oldest businesses on the ASX – it was listed 120 years ago and has paid a dividend every year since.
The ASX share started off as a pharmacy business but has since turned into the largest investment company on the ASX.
It's invested across a variety of sectors, including telecommunications, financial services, building products, resources, agriculture and swimming schools.
Some of the ASX share's biggest holdings include TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Brickworks Limited (ASX: BKW), Tuas Ltd (ASX: TUA) and Macquarie Group Ltd (ASX: MQG).
Since the acquisition of the investment company Milton, Soul Pattinson's diversification has increased. The company is rapidly growing a sizeable structured yield/debt portfolio, including an international credit portfolio it recently invested in.
Its ability to adjust and improve the portfolio with additional investments (and divestments) means it can future-proof itself over time. It's the ASX share that I'm most certain I will own in another 50 years. The steadily growing dividend is a useful bonus.
