Australian shares are a great way to build finances – that's where I'm putting all of my wealth-building efforts, aside from allocating money towards a home. There are a few names in my portfolio I'm planning to own forever.
Ideally, I want to be able to hold an investment for the rest of my life, though it's not a disaster to sell. Holding longer means reducing capital gains tax events and reducing the amount of decisions we have to make.
If we can invest in the right business with a long-term future, then the tailwinds of the compounding can be powerful.
Fortescue Metals Group Ltd (ASX: FMG)
Steel seems to be a very important commodity because of the wide array of uses – residential property construction, infrastructure, car manufacturing and so on. China is a huge buyer of iron ore, which is needed for steel production.
It's difficult to predict what's going to happen with Chinese iron ore demand, but at the moment it seems areas like Chinese infrastructure and (vehicle) manufacturing is picking up some of the slack.
There are reports that suggest India's steel demand could grow at a compound annual growth rate (CAGR) of 7% to reach 190mt by 2030, which could help increase iron ore demand.
But, I'm particularly excited by the long-term potential of this Australian share's green energy efforts. It's looking to create a global portfolio of green hydrogen and green ammonia projects, which could unlock a huge new earnings stream for the company.
The world is planning to permanently move away from fossil fuels – green hydrogen could be a key to decarbonising sectors like heavy machinery, boats and planes.
I also like that Fortescue is building a high-performance battery division, which could be essential in future years and decades.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Pattinson is one of the oldest businesses on the ASX – it has been listed since 1903. This company has already proved it has incredible longevity by lasting over a century.
The investment conglomerate is invested in a number of different sectors including telecommunications, building products, property, financial services, agriculture, swimming schools, resources and so on.
The Australian share ticks the box in terms of diversification and it continues to add to its portfolio, such as its latest investment attempt – an offer to buy some parts of Perpetual Ltd (ASX: PPT), though this has been rejected.
In 20 years, the portfolio could look quite different, but that's part of the attraction – it's not stuck as a particular business in a particular sector.
While there's no guarantee its performance will continue, it has outperformed the ASX share market over the long term and grown its annual ordinary dividend each year since 2000. It delivers that combination of capital growth and dividend growth that I like.
Brickworks Limited (ASX: BKW)
Brickworks is another Australian share that has been around for many decades as the largest brickmaker in the country. It also has a sizeable presence in the US, the biggest brickmaker in the northeast of the country.
There are three things I really like about this company.
The first is that it owns a sizeable chunk of Soul Pattinson shares, which comes with all of the benefits I just described above.
The second is that it owns a growing portfolio of industrial properties inside a property trust with partner Goodman Group (ASX: GMG). Those properties are being built on excess land that Brickworks' building products divisions used to use.
Finally, I like the dividend record – it hasn't cut its dividend in close to 50 years and it has grown its payout each year since 2014.
