I think that every investor should own the two ASX shares in this article including Future Generation Global Invstmnt Co Ltd (ASX:FGG).
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I think that some ASX shares are worth a spot in every portfolio.
Some businesses can be attractive to income investors as they pay a dividend and they can be attractive for growth investors because they are demonstrating solid growth credentials.
I also like the idea of owning businesses that can be held for many years, which allows compounding for a long time rather than regularly triggering taxes on capital gains.
That’s why I like these two ASX shares that could work for every investor portfolio:
Future Generation Global Investment Co Ltd (ASX: FGG)
This is a listed investment company (LIC) which is a very interesting proposition. The idea of a LIC is that it can be invested in a portfolio of assets, usually shares, on behalf of shareholders.
As the name suggests, Future Generation Global provides exposure to international shares. It is invested in the funds of various Australian fund managers that target global shares. If you think about it, the ASX share actually has very strong diversification because each of those funds represents a whole portfolio of different shares.
Some of the fund managers that the LIC is invested with includes: Magellan Financial Group Ltd (ASX: MFG), Cooper Investors, Caledonia, Marsico and Munro Partners.
One of the most impressive things about the Future Generation set up is that these fund managers don’t charge management fees or performance fees. Instead, Future Generation Global donates 1% of its net assets each year to youth mental health charities. It’s a great cause in my opinion.
The ASX share’s gross portfolio return has been solid compared to the MSCI AC World Index (AUD), outperforming it over the past month, six months, twelve months, three years and since inception in September 2015. Over the past three years it has outperformed the global index by an average of 2.3% per annum.
At the current Future Generation Global share price it’s trading at a 14% discount to the pre-tax net tangible assets (NTA) at 31 August 2020. However, the NTA may have grown since then. It currently offers a grossed-up dividend yield of 2.1%. Its diversification and performance makes it an attractive long-term option.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is another ASX share that I believe is a really good long-term investment option.
The investment conglomerate owns a quality portfolio of important and mostly defensive businesses. Can you imagine going without your internet connection? Soul Patts owns a large amount of TPG Telecom Ltd (ASX: TPG) shares. Everyone needs to live in a property, and construction is getting boost in tonight’s budget. Soul Patts owns a significant portion of Brickworks Limited (ASX: BKW). Energy demand is expected to rise in Asia, so New Hope Corporation Limited (ASX: NHC) could rebound.
At 31 July 2020, the ASX could point to total shareholder returns (TSR) of an average of 12.7% per annum over the prior two decades, outperforming the All Ordinaries Accumulation Index by 5.2% per annum.
Whilst a majority of the return came from capital growth, dividends have been important too. Soul Patts has grown its dividend every single year over the past two decades. That’s a great streak.
Soul Patts receives dividends and distributions from its investments. Soul Patts pays for its expenses and then pays out enough of the cashflow to increase the dividend compared to the previous year. In FY20 it only paid out 57% of its regular operating cashflows, meaning a large chunk of earnings can be re-invested for more growth in FY21.
At the current Soul Patts share price it offers a grossed-up dividend yield of 3.5%. The ASX share has been rising recently, so the yield has been pushed lower. But 3.5% is still comfortably better than bank interest rates.
These 3 stocks could be the next big movers in 2020
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Motley Fool contributor Tristan Harrison owns shares of Future Generational Global Investment Company Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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.