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2 ASX 20 shares to buy and hold for decades

Phil Harpur
ASX Investment Manager

Looking for 2 ASX 20 shares that you can buy and hold for the next decade or two?

Of course, there is no absolute certainty in the share market so it’s always a good idea to keep an eye on how your shares are going. However, I think these 2 ASX 20 shares are well placed to continue to perform for decades to come. Both have well-established brands, market-leadership positions, excellent business models, and strong growth prospects.

As with all shares, it is a good idea to purchase them as part of a diversified portfolio in order to get exposure to a broad spectrum of the market.

Telstra Corporation Ltd (ASX: TLS)

Telstra has held the leadership position in Australia’s telecommunications market for several decades now.

It has been undergoing a difficult transition period as it restructures into a more efficient telecommunications company, due to the rollout of Australia’s National Broadband Network (NBN). This transition will continue over the next year or 2.

However, I see this as a very positive move as it positions Telstra well to remain in its number 1 position and more effectively compete with the growing competition in the fixed broadband market, from the likes of Vocus Group Ltd (ASX: VOC) and TPG Telecom Ltd (ASX: TPM), as the NBN continues to be rolled out.

Telstra recently revealed that it’s on track to strip a total of $2.5 billion in costs by 2022. It also stated that it is on track with its earnings before interest, tax, depreciation and amortisation (EBITDA) and free cash flow guidance for FY20, which is excellent news for shareholders and sets Telstra up for strong growth over the next few years.

Telstra’s world class mobile network positions it well to fully leverage the potential opportunities of 5G technology. Telstra has been a world leader in the trialling of 5G technology.

Macquarie Group Ltd (ASX: MQG)

Australia’s largest investment bank, Macquarie, has held a strong track record of profitability over the last few decades. It has performed particularly well over the last 5 years on the ASX, as it continues to grow its revenue and net profit, while its cost-to-income ratio has been steadily declining.

Over the last ten years, Macquarie’s annual profitability growth continues to outperform that of Australia’s big four retail banks – Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ).

Macquarie has been transitioning to become more balanced and diversified business, rather than one heavily focused on a small core group of operations, which was one of the reasons its share price was impacted particularly hard during the global financial crisis.

It provides both growth and income with a dividend of around 4%, which makes it very appealing as an investment. It also has a competitive price-to-earnings ratio of around 17.

The post 2 ASX 20 shares to buy and hold for decades appeared first on Motley Fool Australia.

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Motley Fool contributor Phil Harpur owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Telstra Limited, and Westpac Banking. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Telstra Limited. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020