I think it makes sense to invest for the long-term, if you can find the right ASX shares. There are at least 2 ASX shares in my portfolio that I plan to hold until I'm 100.
Here they are:
Rural Funds Group (ASX: RFF)
Rural Funds is a farmland real estate investment trust (REIT) that owns a portfolio of agricultural properties. Farms have been useful assets for many centuries – I think that will continue for the rest of my life.
The REIT has a diverse group of properties: cattle, almonds, vineyards, macadamias and cropping (sugar and cotton). Diversification is very useful because it's hard to say exactly which farm type will see the strongest growth over the coming years and decades.
Not only is Rural Funds' portfolio diversified by farm type, but it's also spread across different Australian states and climatic conditions. Rural Funds doesn't take on the operational risks, that's on the tenants. Even so, Rural Funds owns water entitlements for tenants to make use of.
Rural Funds leases to high-quality tenants. Many of them are listed in Australia or abroad such as Olam and JBS as well as ASX shares like Treasury Wine Estates Ltd (ASX: TWE), Select Harvests Limited (ASX: SHV) and Australian Agricultural Company Ltd (ASX: AAC).
High-quality tenants should mean a strong ability to keep paying rent. Rural Funds actually has rental indexation built into its contracts. Rental income is contracted to grow either by a fixed 2.5%, or it's linked to CPI inflation, with some contracts having periodic market reviews.
I also really like that Rural Funds is investing in some of its newer farms to make them more productive and more valuable for tenants, which increases the long term rental potential.
Rural Funds is steadily growing its underlying net asset value (NAV). The quarterly distribution continues to grow as well – management aim to grow it by 4% per annum, which it has achieved each year since it listed several years ago.
At the current Rural Funds share price it offers a distribution yield of 4.7%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is one of the best long-term ASX shares around in my opinion.
It has already been listed since 1903, so it clearly has the ability to survive for the ultra-long-term.
Each year that goes by makes it more likely that Soul Patts will be able to survive and thrive for longer because of new investments. It's increasing its diversification with investments like swimming schools, agriculture and reportedly regional data centres.
Everything about the business is long-term focused. Its management and employees stick around for a long time. According to Soul Patts, more than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families.
The investments that Soul Patts makes into businesses, including other ASX shares, are for the long-term. For example, it has held its holdings of Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPG), Australian Pharmaceutical Industries Ltd (ASX: API) and New Hope Corporation Limited (ASX: NHC) for many years.
Soul Patts has a good record of long-term outperformance. At 31 July 2020, Soul Patts had delivered total shareholder returns (TSR) of 12.7% per annum over the previous 20 years, outperforming the All Ordinaries Accumulation Index by an average of 5.2% per annum.
It's also suitable for dividend investors because Soul Patts has grown its dividend every year for the past 20 in a row. That's a wonderful record. It currently offers a grossed-up dividend yield of 3.3%.
