If you're searching for ASX shares to add to your portfolio and hold for the long term, experts say two names stand out: Coles Group Ltd (ASX: COL) and Wesfarmers Ltd (ASX: WES).
These companies have established themselves as staples in the Australian market, offering stability and consistent returns over a very long period.
Coles shares are swapping hands at $18.34 apiece after climbing 13.5% year to date. Meanwhile, Wesfarmers is fetching $74.20 per share at the time of writing, up 29% this year.
Let's see what the experts say about these two high-quality ASX shares.
ASX shares for the long-term
Coles is one of Australia's leading supermarket chains. It's known for its recession-proof earnings and ability to generate steady growth.
UBS has a buy rating on Coles and a price target of $19.50 on the ASX share. At the time of writing, this implies a 6.3% upside.
The broker also anticipates fully franked dividends of 70 cents per share in FY24 and 74 cents per share in FY25. At the current price, this implies dividend yields of approximately 3.8% and 4%, respectively.
According to my colleague James, UBS thinks Coles' strong market position, supported by population growth and a robust store network, positions it well for the future. This means the ASX share can grow in value whilst rewarding shareholders with reliable dividends.
The consensus rating among analysts is a buy, according to CommSec.
The company has shown steady growth. Its defensive nature makes it a solid pick for those looking to secure passive income while benefiting from potential capital appreciation.
Diversified giant with growth potential
Wesfarmers is a powerhouse in the Australian market, boasting a diverse portfolio that includes Bunnings, Kmart, and Officeworks just to name a few.
Recently, the ASX share hit a new 52-week high of $76.05 per share as investors continue to buy it en masse.
And despite trading at a premium — at a price-to-earnings (P/E) ratio of 33 times to be exact — Wesfarmers continues to attract investors due to its strong financial performance and growth prospects.
Bunnings and Kmart have driven Wesfarmers' success, delivering impressive returns on invested capital (ROIC) of 66% and 58.8%, respectively.
The company's strategic investments in growth areas such as lithium mining and healthcare further bolster its future revenue streams.
Although some brokers rate Wesfarmers as a hold, others, like UBS, are more bullish.
UBS expects significant earnings growth of 19% per year from the retail conglomerate through to FY26. Additionally, the broker expects a $2.6 billion profit from Wesfarmers in FY24 alone.
In my view, the ASX share's ownership of many long-standing, price-competitive brands means it has a high wallet share from Aussie consumers.
Foolish takeaway
Experts say both Coles and Wesfarmers offer compelling investment opportunities for those looking to buy and hold ASX shares.
Coles shares are nearly 7% higher in the past 12 months. Meanwhile, Wesfarmers has climbed 50%.
