There aren’t too many ASX 200 Index (ASX: XJO) shares that I’d gladly buy for my portfolio.
I’m looking for businesses that I could buy for the long-term and benefit from compounding over the years.
I don’t think that many financial businesses or resource shares can deliver strong long-term growth due to their size and/or cyclicality. Obviously, most businesses do suffer from the occasional decrease in profit or the share prices.
But, I do think that the two ASX 200 shares I’m about to tell you about could be excellent businesses for many years to come.
Wesfarmers Ltd (ASX: WES)
I think Wesfarmers is a great business. It owns a number of market-leading businesses including Officeworks, Kmart and Bunnings.
Bunnings may well be the best retail business in Australia, it’s worth owning a part of it in my opinion.
There are other businesses inside the Wesfarmers portfolio like Target, Catch, Priceline and many other industrial businesses. One of the most interesting elements about Wesfarmers is its desire to expand into new industries.
It’s developing a lithium project called Mt Holland. Wesfarmers also recently acquired an ASX-listed business called Australian Pharmaceutical Industries (API) which operates Priceline and Clear Skincare Clinics.
API is going to be the start of a new Wesfarmers Health division. Healthcare is a huge potential industry for the company to tap into with long-term growth potential thanks to the ageing demographics.
Don’t forget, the ASX 200 share also pays a dividend every six months to investors as well, boosting returns.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
This business is even more diversified than Wesfarmers.
It has a portfolio of businesses that it owns outright or has a stake of.
Some of the private businesses and industries it’s invested in includes agriculture, swimming schools, electrical parts and financial services.
In terms of the ASX 200 shares it’s invested in, it is invested in large caps like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Macquarie Group Ltd (ASX: MQG), Wesfarmers, CSL Limited (ASX: CSL) and Transurban Group (ASX: TCL).
Some of its biggest investments include Tuas Ltd (ASX: TUA), TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW) and New Hope Corporation Limited (ASX: NHC).
It’s not just invested in businesses, but it’s also invested in property and ‘structured yield’ (across the capital structure).
WHSP has increased its dividend every year for more than two decades. I like the long-term growth potential of the portfolio value and dividend.
