There are some ASX shares that could grow wealth for investors for a very long time. Certainly, I think they're contenders for creating generational wealth.
I'm looking for businesses that can grow profit beyond the foreseeable future. It can also help wealth-building if those investments pay dividends. I think investors can benefit from companies that can produce both growing dividends and profit growth over time, which could lead to very good returns over the long term.
Image source: Getty Images
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Pattinson is one of the oldest businesses on the ASX. It was listed in the 1900s as a pharmacy business but the company is now a diversified investment house. It has investments across a range of different sectors including financial services, resources, telecommunications, building products, agriculture, and so on.
The business has been growing wealth for shareholders for a long time. At the company's annual general meeting (AGM), it said that its total shareholder returns (TSR) were an average of 12.5% per annum over the prior 20 years, which was 3.4% higher than the All Ordinaries Accumulation Index (ASX: XAOA).
This ASX share has also grown its dividend every year since 2000. Over the last 20 years, it has grown at a compound annual growth rate (CAGR) of 8.5%.
The company continues to grow and diversify its investment portfolio, with long-term growth potential.
iShares S&P 500 ETF (ASX: IVV)
One of the world's greatest investors, Warren Buffett, has suggested that most investors would do very well with an S&P 500 fund. That's because they typically come with low management costs and offer investors significant diversification. The ASX share has an annual management fee of just 0.04%.
Taking a passive approach means investors can just sit back and (hopefully) enjoy the long-term growth of the exchange-traded fund (ETF).
The S&P 500 represents 500 of the biggest and most profitable businesses listed in the US. While they're listed in the US, many of them are global businesses such as Microsoft, Alphabet, Amazon.com, Apple, McDonald's, Costco, Starbucks, and so on.
Past performance is not a guarantee of future returns, but over the past five years to January 2023, the iShares S&P 500 has made an average return per annum of 12.3% and over the past decade, the average return per annum was 16.98%.
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
This ETF is constructed by a team of analysts at share research outfit Morningstar.
The ETF only invests in US shares, not ASX shares, though the underlying earnings are usually globally diversified.
The VanEck Morningstar Wide Moat ETF considers businesses from a watchlist of companies that are deemed to have competitive advantages that are expected to endure for at least a decade and probably for two decades.
But, it doesn't own hundreds of positions. It currently has 49 holdings as at 16 February 2023. The investment team believe that the shares were "trading at attractive prices relative to Morningstar's estimate of fair value".
This ETF has actually outperformed the S&P 500. Over the past five years, it has produced an average return per annum of 14.54%, that's after the annual management fee of 0.49%. But, remember that past performance is not a guarantee of future returns.
