Australia Markets open in 4 hrs 27 mins

3 ASX shares to buy to become wealthy

Tristan Harrison
scrabble retirement wealth finance

If you want to become wealthy then you should consider buying ASX shares.

When you think about what is the asset class that’s increasing its underlying value the most I would say it’s businesses. Arguably, the underlying value of a property is the strength of its rental income, which hasn’t been growing much at all.

Some businesses are creating excellent wealth for shareholders, like these top picks:

Citadel Group Ltd (ASX: CGL)

Citadel is a software business that specialises in providing secure management systems, particularly for government agencies. Its most recent acquisition, Gruden, has a scalable eProcurement space used by the Federal Government, the Victorian Government and the New South Wales Government.

Citadel continues to win new contracts and it generates dependable revenue every year. Governments are usually the most reliable payers, even in a downturn.

It’s trading at under 23x FY19’s estimated earnings with a grossed-up dividend yield of 2.5%.

Brickworks Limited (ASX: BKW)

Brickworks is one of the older businesses on the ASX, it’s a large designer, developer, manufacturer and seller of building materials. It just purchased a major brick business in the US, which opens up a big opportunity with the size of the US market.

Growing populations, infrastructure projects and urban gentrification & rejuvenation should result in long-term growth for Brickworks.

It also has a large investment stake in investment business Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

It’s trading at under 13x FY19’s estimated earnings with a grossed-up dividend yield of 4.5%.

Naos Emerging Opportunities Company Ltd (ASX: NCC)

This is a listed investment company (LIC) that invests in shares with market capitalisations under $250 million. Often, these businesses are hidden gems that will become the mid-caps of the future.

Since inception in February 2013 Naos has delivered average returns per annum of 14.7% before fees but after expenses.

Naos is enriching shareholders along the way with a sustainable growing fully franked dividend. The grossed-up dividend yield is currently 8.9%.

Foolish takeaway

These three shares have provided market-beating returns over the past few years. At the current prices they seem like they could be excellent wealth-builders over the five years.

At the current prices, Citadel looks like a good value opportunity. However, the current market volatility may hurt its share price in the short-term.

5 Companies we like better than Citadel Group

When ace stock picker Scott Phillips has a buy recommendation, history suggests it can pay to listen.

Scott recently revealed what he believes are the five best ASX stocks for investors to buy right now… and Citadel Group wasn’t one of them! That’s right — he thinks these 5 stocks are even better buys.

See the 5 stocks

More reading

Motley Fool contributor Tristan Harrison owns shares of 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 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.