I think the best way to invest is to choose high-quality shares and hold them for the long-term, preferably forever.
But, that doesn’t mean you should own every investment forever. It just means that it’s great when you can find an investment to own forever.
I’m not sure how many shares on the ASX we could commit to forever, but there are some shares that look like solid bets for at least the next decade:
Altium Limited (ASX: ALU)
Altium is an electronic PCB software provider. By 2025 it’s aiming for US$500 million of revenue with electric design likely to be most of the projected revenue, but electric parts & supply chain and electronic manufacturing & embedded software will also play their part.
The software business is aiming to dominate the industry and is continually adding new features. It’s also launching its cloud platform called Altium 365 which brings different elements of its offering together.
Electronics continues to become more complex with growth of the ‘Internet of Things’ and artificial intelligence. Altium is aligned to this growth with its software and benefits.
If Altium can achieve market dominance with 100,000 Altium Designer its growth won’t stop in 2025, it will have even higher profit margins and could expand into other electronic areas and software with acquisitions.
An earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 40% or higher is in Altium’s sights. Excellent cashflow, no debt and growing dividends are also attractive features for shareholders.
It’s currently valued at 42x FY21’s estimated earnings.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts has been a solid investment for over a century and I believe it’s going to be a good quality pick for at least the next decade.
It’s an investment conglomerate that invests in various industries. Some of its investments include Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPM), Palla Pharma Ltd (ASX: PAL), Clover Corporation Limited (ASX: CLV), swimming schools, agriculture and luxury retirement living.
Soul Patts says that it tries to invest with a contrarian style in uncorrelated assets for the long-term. It’s this strategy that has allowed Soul Patts to outperform the All Ords Accumulation Index over the past two years, three years, five years, ten years and fifteen years. Indeed, over the past five years it has delivered total shareholder returns (capital growth and dividends) of an average of 11.8% per annum, outperforming the index by 3.1% per annum.
Looking at historical returns, $1,000 would have turned into $395,788 between 1979 to 2019 at a compound annual growth rate of 16.1% for 40 years.
I wouldn’t expect 16% returns going forward, but outperformance can definitely continue as well as a growing dividend. The Soul Patts dividend has increased every year since 2000.
Both Altium and Soul Patts have very promising long-term futures. Altium is probably going to produce the biggest returns during the 2020s unless something changes in the electronic PCB software world, but Soul Patts looks better value to me today.
The post 2 ASX shares I want to hold until 2030 and beyond appeared first on Motley Fool Australia.
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Tristan Harrison owns shares of Altium and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Clover 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. The Motley Fool Australia has recommended Brickworks. 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