There are few shares on the ASX that I think that every investor should own. Some won't generate good returns, some are too dangerous and some operate in poor industries.
However, shares that have long-term growth potential and are paying good dividends are excellent candidates for my list:
Ramsay Health Care Limited (ASX: RHC)
Ramsay is Australia's biggest private hospital operator. The benefits of being the biggest are clear to see for Ramsay, as its operating profit margins are materially higher than its competitors. I like that the business is always investing for growth both in Australia and overseas.
It has defensive earnings because people get sick all year round, it doesn't matter what the economical cycle is doing. It also has growing earnings thanks to Australia's ageing population, which should mean more patients through the doors in the coming years.
I think Ramsay is a good dividend stock because it increases its dividend at good rate each year. It's currently trading with a grossed-up dividend yield of 3.15%.
Right now, Ramsay is trading at 20x FY19's estimated earnings.
Challenger is Australia's leading annuity provider. There is a growing flow of money entering the retirement phase as the effect Australia's ageing population boosts Challenger. More and more people are looking for a secure source of income from their capital and Challenger's annuities are a very popular product for that purpose.
Market volatility and a declining property market could see more people choose an annuity for their funds, even if that volatility hurts Challenger in the short-term.
I think Challenger is the best finance stock on the ASX. It has increased its dividend every year since the GFC and currently has a grossed-up dividend yield of 4.17%.
Challenger is currently trading at 16x FY19's estimated earnings.
Foolish takeaway
I am a fan of both of these businesses, which is why they are two of the largest positions in my portfolio. At the current prices I believe both are good long-term buys, rising interest rates could make them even better value.
