There aren’t many shares I think should be in every investor’s portfolio.
Some shares may not suit some investors because they don’t pay a dividend. Other shares may not be attractive due to the fact they offer little growth.
I think investors need to be very careful of businesses that have a lot of debt on the balance sheet, as this can bring down the business if business operations don’t go according to plan.
I also believe the best businesses over the next decade will be ones that have multiple earnings streams from multiple countries. Just look at Alphabet – its various services like Google Search, Youtube and so on are all very successful. Amazon has its retail, its logistics, its Amazon Prime membership and AWS.
On the ASX I think these two shares are worth a place in every portfolio:
Altium Limited (ASX: ALU)
The electronic PCB software business has been one of the top performers on the ASX over the past decade. The growth of technology usage in all aspects of the world is driving demand for Altium’s various services and subscription products. It services some of the biggest companies in the world like Google, Amazon, Apple, Microsoft, Tesla and Toyota.
Altium has no debt on its balance sheet, a rapidly growing cash balance, growing profit margins and a very attractive growth outlook over at least the next six years with targets of 100,000 Altium Designer subscribers and US$500 million of revenue.
The rapidly-growing dividend yield of around 1% is a decent starting place and the valuation of 49x FY20’s estimated earnings is better value than many other ASX tech shares.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is probably my favourite business on the ASX these days. It’s an investment conglomerate that allocates its money into other businesses it thinks are attractive long-term opportunities that can or will generate good cashflow.
With few liabilities to speak of, Soul Patts’ balance sheet looks strong to me and I also like that the company has high levels of management ownership, which should help ensure that no unnecessary risks are taken.
Its share price is close to a 52-week low, which I think is the perfect time to buy shares of this conservative and contrarian investment business that has been going for over a century. The ability to change its investments as the years go on means Soul Patts will hopefully never become irrelevant like some other businesses that are stuck in one particular industry.
I highly value that the company aims to steadily increase its dividend to shareholders, which gives good income security. It currently offers a grossed-up dividend yield of 3.9%.
I think both of these shares are very high-quality options and are worth a spot in every portfolio. If I had to choose one of the two today it would be Soul Patts because of the depressed share price and the low prices of its underlying holdings.
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Motley Fool contributor Tristan Harrison owns shares of Altium and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium. 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. 2019