I love the idea of owning ASX dividend stocks for the ultra-long term and getting passive income every year. How good would it be to receive income forever?
No business is guaranteed to last the rest of our lifetimes, but I'm going to talk about two businesses that could be good options for a very long time. I normally write about Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) in an article like this, but today I'm going to delve into two other names I really like as long-term picks for income.
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Rural Funds Group (ASX: RFF)
We all need to eat food, we can't survive without it. I don't think that's going to change in our lifetimes.
Why not own a business involved in food production? I think owning a real estate investment trust (REIT) which owns a large amount of farmland makes a lot of sense. We can benefit from the long-term growth in the long-term value of farms and resilient rental profit each year.
Agriculture can be a volatile industry, with variable weather impacting production, and unpredictable food prices. Farmland has been a useful asset for thousands of years and I think it will be good for the rest of our lifetimes.
Rural Funds is invested in a few different farm types – almonds, macadamias, cattle, vineyards and cotton.
The ASX dividend stock pays a distribution to investors quarterly – the annual distribution for FY24 is expected to be 11.73 cents per unit, translating into a distribution yield of 5.7%.
I've already owned shares of this ASX dividend stock for several years and I'm planning to be a shareholder for a long time to come.
Wesfarmers Ltd (ASX: WES)
Wesfarmers can trace its origins back to 1914, so it's been going over a century.
It started as a Western Australian farmers cooperative, but it has grown into being one of Australia's largest listed companies.
It now has a strong market position in home improvement, building materials, general merchandise and apparel, office and technology products, health and beauty, wholesale distribution of pharmaceutical goods, manufacturing and distribution of chemicals and fertilisers, and expansion into lithium mining, among other things. Bunnings and Kmart are the two most important businesses.
The business has shown a good ability to invest in new sectors and divest its exposure to other areas. For example, it used to own the businesses Coles Group Ltd (ASX: COL), Kmart Tyre and Auto as well as coal mines.
Wesfarmers is able to change its business portfolio to gain exposure to sectors with an appealing growth profile, such as healthcare. I think this will enable Wesfarmers to be around in 30 or 50 years.
The ASX dividend stock has a goal of increasing its dividend, if it can, each year. In FY24, it's projected to pay an annual dividend per share of $1.91 according to Commsec. That would be a grossed-up dividend yield of 4.8%.
