As the last-minute Christmas shop frenzy continues, many people will be scurrying around trying to find the ideal present. If you are struggling for gift ideas for your loved ones, why not give them the greatest gift of all: potential financial freedom.
With the magic of compounding interest, a well-weighted ASX share portfolio could be the most valuable present you ever gift. The ideal portfolio should contain quality companies with a strong competitive advantage, recurring earnings and growing dividends.
Here are 2 ASX shares to help you build the best Christmas present.
CSL Limited (ASX: CSL)
CSL is the largest plasma product company in the world, servicing the growing immunoglobulin therapy market. Currently, CSL has the second largest market value of any company listed on the ASX and trades at 32 times forward earnings. Investors are willing to pay these multiples because of the consistent and organic earnings growth CSL has provided over the long term.
2019 has been a blockbuster year for CSL, with the company’s share price surging more than 53% for the year. Earlier this year CSL’s FY19 results reported revenue growth of 11% and a 7% growth in profit for the financial year.
CSL is well poised to deliver further share price and volume growth in 2020 with the blood plasma market expected to remain tight for the next 3 years. The company is still investing heavily in building plasma collection centres in order to expand market share.
With strong management, commitment to patient care, industry-leading margins and great investment in R&D, CSL can be regarded as one of the most quality companies on the ASX.
Coles Group Ltd (ASX: COL)
Following its demerger from Wesfarmers Ltd (ASX: WES), Coles listed on the ASX late last year. The Coles share price has rallied nearly 30% in 2019 as the company forecasts a return to profit in 2019.
Following the demerger, Coles has established a five-year turnaround plan with the aim of retaining dividends, restoring profit growth and maintaining market share.
The company plans on slashing $1 billion in costs over four years and slowing the opening of new stores to focus on online and convenience avenues. Some analysts believe that this strategy will help Coles boost same-store growth and improve margins and earnings. The full impact of these changes will only be seen in 2023-24.
Coles has committed to an 80–90% dividend payout ratio and it is estimated that investors could expect a 4% fully franked dividend yield. With the Australian population growing and the supermarket sector remaining stable, Coles could be an excellent long-term buy for a starter portfolio.
In my opinion, a starter ASX share portfolio can potentially be the gift that literally keeps on giving. I think it would be an excellent present and educational tool for kids or anyone looking to get into the share market.
The post Why an ASX share portfolio is the best Christmas present appeared first on Motley Fool Australia.
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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of Wesfarmers 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. 2019