One of Australia's leading funds, Australian Foundation Investment Co Ltd (ASX: AFI) (AFIC), recently made some S&P/ASX 200 Index (ASX: XJO) share investments in its portfolio.
AFIC is the largest and one of the oldest listed investment companies (LICs), meaning it invests in other shares on behalf of shareholders.
The LIC structure is beneficial because it provides permanent capital for long-term investment. LICs can also provide investors with a good source of dividends. AFIC recently announced it would move to pay quarterly dividends, giving investors more regular cash flow.
What are the types of investments that AFIC targets?
It has outlined that it focuses on quality companies and it has built a well-diversified portfolio with the right mix of income and growth. By making those investments, Aussies can benefit from compounding over the long-term.
There were six ASX 200 shares amid three growth trends that AFIC decided to invest in.
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Rising dividends per share
Two of the ASX 200 shares that AFIC recently invested in were ASX blue-chips: Woolworths Group Ltd (ASX: WOW) and Telstra Group Ltd (ASX: TLS).
Both of these companies have achieved a turnaround from a growth halt in recent history.
AFIC highlighted that the supermarket business is delivering dividend growth amid rising profits.
In FY26, Woolworths grew its annual dividend by 15% to 97 cents per share. AFIC highlighted that analysts estimate the annual dividend is projected to increase by another 10% in FY27.
For Telstra, the ASX telco share hiked its annual dividend per share by 10.5% to 21 cents per share. Analyst forecasts suggest the company could hike its dividend again in FY27 by another 4.75% to 22 cents per share.
Growing earnings per share
Some of the best ASX 200 shares have delivered earnings growth for many years in a row, and they can continue to deliver impressive profit growth. Earnings projections suggest profit could compound.
Pro Medicus provides a full range of medical imaging software and services to hospitals, imaging centres and healthcare groups worldwide. Earnings per share (EPS) rose 26.4% in FY26, and it's predicted to increase another 30.9% in FY27, according to AFIC.
Meanwhile, TechnologyOne Ltd (ASX: TNE) is a provider of enterprise resource planning (ERP) software for businesses, local councils, governments, universities and so on. It's benefiting from rising demand for digitalisation and efficiencies.
The TechnologyOne EPS rose by 16.7% to 42 cents in FY25, and EPS is forecast to increase 19% to 50 cents, according to AFIC.
Compelling gold outlook
The final duo of ASX 200 shares that AFIC revealed it had bought were ASX gold shares.
They are two of the ASX's largest players and there are various tailwinds for the sector such as inflation, investors seeking safety away from the uncertainty of government bonds (and currency).
A higher gold price over the last few years has led to significant improvements in operating cash flow.
For Newmont Corporation CDI (ASX: NEM), operating cash flow grew 60% to US$10.3 billion in FY25 and is projected to rise another 28% to US$13.2 billion in FY26, according to AFIC.
With Evolution Mining Ltd (ASX: EVN), operating cash flow grew 30% in FY26 to A$2.6 billion, it's forecast to rise another 3.8% in FY27.
Of course, these aren't the only ASX shares that could be compelling long-term buys.
