2 ASX shares I'm never selling

Finding great ASX shares is only half the battle. Holding onto them through good times and bad is also part of the skill.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Finding great ASX shares can be difficult, but that's only half the challenge. The other half is holding onto great companies through good times and bad, to allow the magic of compounding increase your net worth. 

This has become harder recently as there are plenty of great technology and innovation companies that fly past like meteors. However, there are still many companies that will deliver consistent growth, and consistent dividends. The secret is to buy them at a great price and hold onto them as they grow. 

Resource ASX shares

The iron ore industry has been the great constant in my life. It started before I was born, grew with me, and will be raging long after I am gone. As a result, I started purchasing shares in Fortescue Metals Group Limited (ASX: FMG) at approximately $8 per share. Today, my average dollar cost is around $10 per share. This means I was able to secure a high dividend paying share at a low price. 

The company has a good future. It is in the finishing stages of developing two high grade iron ore mines, and selling into a market where demand is very strong. In addition, the company operates on solid operating margins. However, Fortescue is also expanding its metals portfolio. It recently announced a joint venture to explore part of the Paterson's province in Western Australia for gold. Along with a number of exploration activities in South America for gold and copper. 

Fortescue is selling at a price to earnings ratio (P/E) of 7.73, which is just under half of BHP Group Ltd (ASX: BHP). At this price it has a trailing 12-month (TTM) dividend yield of 10.86%.

Finding solid resource investments like this in the early stages can be difficult. Right now, I think that two companies with potential for solid growth are Base Resources Limited (ASX: BSE), and maybe Ecograf Ltd (ASX: EGR).

Real estate

After the coronavirus market rout in March, I started to buy shares in Centuria Office REIT (ASX: COF). The company is a real estate investment trust (REIT), thus there are laws governing transparency and how much it has to pay out in distributions. I like this REIT for a few reasons.

First, it is the country's largest pure play office REIT. This means it is not diversified and directs all of its resources into commercial buildings. This sector has been quite resilient to COVID-19 in general, but more so for Centuria Office REIT. That is because many of the company's tenants are government departments. Second, it has a long weighted average lease expiry, currently 4.7 years. 

Right now the company is paying a TTM dividend yield of 8.48% and has a P/E of 12.6. I have no intention of selling this as it is a high paying dividend ASX share which forms part of my passive revenue streams. 

Other companies that are similar right now include DEXUS Property Group (ASX: DXS), and Abacus Property Group (ASX: ABP).

Motley Fool contributor Daryl Mather owns shares of Centuria Office REIT and Fortescue Metals Group Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

More on Share Market News

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Share Market News

Broker gives its verdict on BHP shares

Let's see what Bell Potter is saying about the Big Australian.

Read more »

A man in his office leans back in his chair with his hands behind his head looking out his window at the city, sitting back and relaxed, confident in his ASX share investments for the long term.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

Woman holding gold bar and cheering.
Gold

Why Macquarie expects this surging ASX 200 gold stock could leap another 40%

Macquarie forecasts another year of strong outperformance from this fast-rising ASX 200 gold miner.

Read more »

A young woman looks at here phone as she strides out in an airport dragging her wheelie bag behind her and smiling widely.
Broker Notes

Macquarie tips 15% upside for this ASX 200 industrials stock

Is this transportation business preparing for take-off?

Read more »

Red buy button on an apple keyboard with a finger on it representing asx tech shares to buy today
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another momentous session for ASX shares this Friday.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why BHP, Catalyst Metals, Mesoblast, and Pilbara Minerals shares are shooting higher

These shares are ending the week with a bang. But why?

Read more »

Disappointed man with his head on his hand looking at a falling share price his a laptop.
Share Fallers

Why 29Metals, Atlas Arteria, DroneShield, and Yancoal shares are falling today

Let's see why these shares are ending the week in the red.

Read more »