Ideally, there are some ASX shares in my portfolio that I'd want to own for the rest of my life.
Owning good stocks for the ultra-long term can be really good for growing wealth because we can benefit from compounding and reducing the capital gains tax. If I never sell, then I'll never activate any capital gains tax events.
Of course, I wouldn't want to hold a stock for decades if it's a mediocre business. The two ASX shares below are ones I've already held for several years. I think they're quality, and I plan to hold them for a long time to come.
Rural Funds Group (ASX: RFF)
Rural Funds is a real estate investment trust (REIT) that owns farmland in different states and climactic conditions across Australia, offering good diversification.
Farmland has been a useful asset for a very long time, and I think it will continue to be important for the rest of my life. Rural Funds is invested in several different farming sectors, including cattle, almonds, macadamias, cropping, and vineyards.
I don't know what's going to happen with interest rates over the long term, but I think the current valuation (more than) takes into account the headwinds of the higher RBA cash rate. Rural Funds said it had an underlying net asset value (NAV) of $3.07 in December 2023.
Rural Funds is benefiting from steady rental increases, with some contracts having fixed annual increases and others being linked to CPI inflation, plus market reviews.
The ASX share aims to grow its distribution by 4% per annum, though it has maintained in the last couple of years at 11.73 cents per unit. It's currently paying a distribution yield of 5.7%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is an investment house that has been a listed business since 1903 – and it has paid a dividend every year since then.
The business has sizeable investments in many other ASX shares, including Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), CSL Ltd (ASX: CSL), Goodman Group (ASX: GMG) and Wesfarmers Ltd (ASX: WES).
It also has quite a few private businesses, including agriculture, water rights, swimming schools, Ampcontrol (electrical parts), and Ironbark (financial services). And it invests in credit and property.
I like the diversification that Soul Patts' portfolio offers. But, most importantly, in my mind, the company has the flexibility and investment mandate to search for future opportunities across industries and asset classes. This ability can help the business future-proof its portfolio and help ensure that it's still around for the decades ahead.
Soul Patts has built its portfolio to focus on typically defensive assets that can pay useful cash flow and help the company fund dividends to shareholders. The business has grown its dividend every year since 2000, which is a great record. It currently has a grossed-up dividend yield of 3.8%.
