Top 10 Long-Term Buy and Hold Shares
- Thread starter JIT
- Start date
Coming from the fundamental analysis school of thought I believe for long term buy and hold the share price of a company will eventually track the companies EPS (Earnings per share) and DPS (Dividend per share) growth. Which will ultimately determine the total shareholder return.
Lets look at the 10 yr EPS and DPS growth rates:
Company------------- EPS -------- DPS
BHP------------------14.6%-------8.8%
ANZ------------------6.0%--------5.9%
WBC-----------------3.8%--------8.9%
CBA------------------7.3%--------8.8%
RIO------------------11.6%-------(-5.2%)
QBE------------------33.2%-------23.5%
TLS------------------(-1.1%)-----4.4%
WPL------------------3.4%-------3.4%
NAB-----------------(-0.9%)-----1.9%
WOW----------------16.9%-----17.5%
As you can see there are some companies whose EPS and DPS growth rates over last 10yrs is outstanding and for some it's average while others poor.
Out of these companies I would only like to own WOW, BHP, CBA, QBE. I already own WOW, BHP and QBE. CBA is bit pricy for my liking. So happy to wait. The rest I am happy to pass. There are several other outstanding companies to choose from.
I am sure many of you will argue past performance is no guarantee of future performance. I totally understand that but just like when you choose to buy a property for good CG you look at past history of CG of a suburb. And so far suburbs with good CG history have continued to show good CG in the same way when I decide to invest in companies I want to look at their history because it tells me a lot about the companies business competency, management competency and attitude towards delivering good shareholder returns.
Cheers,
Oracle.
Lets look at the 10 yr EPS and DPS growth rates:
Company------------- EPS -------- DPS
BHP------------------14.6%-------8.8%
ANZ------------------6.0%--------5.9%
WBC-----------------3.8%--------8.9%
CBA------------------7.3%--------8.8%
RIO------------------11.6%-------(-5.2%)
QBE------------------33.2%-------23.5%
TLS------------------(-1.1%)-----4.4%
WPL------------------3.4%-------3.4%
NAB-----------------(-0.9%)-----1.9%
WOW----------------16.9%-----17.5%
As you can see there are some companies whose EPS and DPS growth rates over last 10yrs is outstanding and for some it's average while others poor.
Out of these companies I would only like to own WOW, BHP, CBA, QBE. I already own WOW, BHP and QBE. CBA is bit pricy for my liking. So happy to wait. The rest I am happy to pass. There are several other outstanding companies to choose from.
I am sure many of you will argue past performance is no guarantee of future performance. I totally understand that but just like when you choose to buy a property for good CG you look at past history of CG of a suburb. And so far suburbs with good CG history have continued to show good CG in the same way when I decide to invest in companies I want to look at their history because it tells me a lot about the companies business competency, management competency and attitude towards delivering good shareholder returns.
Cheers,
Oracle.
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I'm not going to take the effort Oracle but could you rate them by enterprise value? It looks suspiciously like the ten largest companies to me. That's why I thought they were so bold. 
Lets get fair dinkim. Either discuss the largest companies on the ASX or discuss the best investments. If a full service broker gave me that list I'd sack them immediately. I don't need a suit to tell me the share codes of the "Top 10".
Lets get fair dinkim. Either discuss the largest companies on the ASX or discuss the best investments. If a full service broker gave me that list I'd sack them immediately. I don't need a suit to tell me the share codes of the "Top 10".
I'm not going to take the effort Oracle but could you rate them by enterprise value? It looks suspiciously like the ten largest companies to me. That's why I thought they were so bold.
Lets get fair dinkim. Either discuss the largest companies on the ASX or discuss the best investments. If a full service broker gave me that list I'd sack them immediately. I don't need a suit to tell me the share codes of the "Top 10".
Company--------------Market Capitalisation ($ million)
BHP-------------------$140,083
CBA-------------------$78,916
WBC------------------$68,605
ANZ-------------------$61,178
NAB-------------------$53,355
RIO-------------------$51,035
WOW------------------$35,053
WPL-------------------$34,423
TLS-------------------$32,850
QBE-------------------$17,888
I don't think they are the largest companies by market cap. Couple come to mind WES ($34,015 mil), NCM ($31,053 mil), CSL($18,067 mil) which have market cap more than some of the companies mentioned above.
I think a lot these brokerage firms only suggest companies that they know have a good chance of not going broke due to their size and number of years in operation. They might not make good profit growth but that doesn't matter so much. They are so worried about suggesting some mid cap company only to go broke and with it goes their reputation and chance of being sued, that they never make such a recommendation for long term buy and hold.
Cheers,
Oracle.
Hi Jit,
My portfolio looks very similar to that minus TLS and NAB.
WOW - 14.92% (Avg Buy Inc. Brokerage: $26.558)
QBE - 13.52% ($17.526)
BHP - 12.65% ($38.252)
WBC - 11.93% ($23.168)
CBA - 10.98% ($50.977)
RIO - 9.42% ($67.156)
WPL - 9.11% ($42.93)
ANZ - 6.21% ($22.336)
TTS - 4.96% ($2.23)
WES - 3.72% ($28.215)
BEN - 2.58% ($8.73)
Thats my portfolio weighting and pricing.
I've just started out in shares tho over the past 3 months
Regards,
RH
My portfolio looks very similar to that minus TLS and NAB.
WOW - 14.92% (Avg Buy Inc. Brokerage: $26.558)
QBE - 13.52% ($17.526)
BHP - 12.65% ($38.252)
WBC - 11.93% ($23.168)
CBA - 10.98% ($50.977)
RIO - 9.42% ($67.156)
WPL - 9.11% ($42.93)
ANZ - 6.21% ($22.336)
TTS - 4.96% ($2.23)
WES - 3.72% ($28.215)
BEN - 2.58% ($8.73)
Thats my portfolio weighting and pricing.
I've just started out in shares tho over the past 3 months
Regards,
RH
Why do you need to hold those companies when most super funds hold them anyway.
Smal Caps is the area to be.
Just compare TLS ot IInet and TPG over the past 4 year with price/eps/market share
Compare the emerging copper/iron ore/rare earth plays against the big miners
Smal Caps is the area to be.
Just compare TLS ot IInet and TPG over the past 4 year with price/eps/market share
Compare the emerging copper/iron ore/rare earth plays against the big miners
How brave of them.
My god, we actually agree on something!
Not much of a list , exactly what you'd expect .
The banks are risky long term anyway, running out of mobs to buy and they'll be getting blocked soon imo anyway , too much monopoly.
Plus , like Telstra , they're running our of ways to rip us off and those tricks will be getting blocked too before long.
Woolies is probably gonna get blocked too , more monopoly.
My two bobs worth, Paladin energy , lots of room for a quadruple there and it shouldn't take long.
Woodsides probably good for a double too I reckon, 12 -18 mths.
Cheers
The banks are risky long term anyway, running out of mobs to buy and they'll be getting blocked soon imo anyway , too much monopoly.
Plus , like Telstra , they're running our of ways to rip us off and those tricks will be getting blocked too before long.
Woolies is probably gonna get blocked too , more monopoly.
My two bobs worth, Paladin energy , lots of room for a quadruple there and it shouldn't take long.
Woodsides probably good for a double too I reckon, 12 -18 mths.
Cheers
RH, I hope i can comment on your portfolio without it being considered either critisism or advice. I have been known to get abusive when those who know nothing of my time lines or risk tolerance give me advice so there is no way I would do the same. I will assume you are much younger than I and gainfully employed.
Firstly, if you are busy making a dollar, which doesn't give you time to study the market, I think you have done well. You have a portfolio which, as near as damn it, will match the gross returns of the bulk of professionally managed funds based on the ASX, and you are not feeding the parasites. :good on 'ya:
This portfolio is unlikely to make you rich though. One day you will go outside the square and buy something outside the ASX 200 . Maybe not the first venture but soon enough you will put a few percent of your funds into it and it will return as much as the rest of the portfolio combined. You will be hooked and you will ask yourself why you are working. There is a point at which "making a living" interferes with "making a real dollar".
You're not there yet but be open to the possibility.
Firstly, if you are busy making a dollar, which doesn't give you time to study the market, I think you have done well. You have a portfolio which, as near as damn it, will match the gross returns of the bulk of professionally managed funds based on the ASX, and you are not feeding the parasites. :good on 'ya:
This portfolio is unlikely to make you rich though. One day you will go outside the square and buy something outside the ASX 200 . Maybe not the first venture but soon enough you will put a few percent of your funds into it and it will return as much as the rest of the portfolio combined. You will be hooked and you will ask yourself why you are working. There is a point at which "making a living" interferes with "making a real dollar".
You're not there yet but be open to the possibility.
I guess this is one thing that i actually agree with Sunfish.
I think one needs to be very wary of creating any list of a 'buy and hold' share.
As Bill has stated many times in argument about index funds, if a 'buy and hold' represents an intelligent mechanism for investing, then why when one looks back through time do the 'leaders' change over time.
I think the answer lies in the understanding that shares are just a part ownership in an underlying business. And businesses are organic, they are constantly adapting to a changing environment. Some manage to adapt, others dont, some have an easier ability to adapt because of high barriers to entry, others are just 'commodity' type businesses that come and go. (commodity in this sense doesnt mean selling physical commodities, but rather that their business is 'common' or easily replicated/low barriers to entry/low brand appeal/is not the lowest cost producer/etc etc).
In persuit of this thread, i strongly recommend anyone who is serious about share investing to google the NIFTY 50, and its history.
Why?
because even if one was to suppose that a 'good' share should be held because of the underlying strength of the business, then future return is still dictated by the relativity of the pricing of the business (ie the share price) relative to the intrinsic value of the share. ie even if a business (share) is good, if the price is too high, then there is an increased probability that future returns will be substandard.
I think one needs to be very wary of creating any list of a 'buy and hold' share.
As Bill has stated many times in argument about index funds, if a 'buy and hold' represents an intelligent mechanism for investing, then why when one looks back through time do the 'leaders' change over time.
I think the answer lies in the understanding that shares are just a part ownership in an underlying business. And businesses are organic, they are constantly adapting to a changing environment. Some manage to adapt, others dont, some have an easier ability to adapt because of high barriers to entry, others are just 'commodity' type businesses that come and go. (commodity in this sense doesnt mean selling physical commodities, but rather that their business is 'common' or easily replicated/low barriers to entry/low brand appeal/is not the lowest cost producer/etc etc).
In persuit of this thread, i strongly recommend anyone who is serious about share investing to google the NIFTY 50, and its history.
Why?
because even if one was to suppose that a 'good' share should be held because of the underlying strength of the business, then future return is still dictated by the relativity of the pricing of the business (ie the share price) relative to the intrinsic value of the share. ie even if a business (share) is good, if the price is too high, then there is an increased probability that future returns will be substandard.
Property investors must recognise one underlying truth that makes property unique. Each property represents a little monopoly on planet earth. That piece of land cant be replictated.
This makes property a unique investment in my opinion.
(However this just provides a reason why individual properties may go up over the very long term, it doesn't mean that property at a particular point in time will generate satisfactory future returns except over the very long term (and long term means generational, not doubling every 10 years)
This makes property a unique investment in my opinion.
(However this just provides a reason why individual properties may go up over the very long term, it doesn't mean that property at a particular point in time will generate satisfactory future returns except over the very long term (and long term means generational, not doubling every 10 years)
RH, I hope i can comment on your portfolio without it being considered either critisism or advice. I have been known to get abusive when those who know nothing of my time lines or risk tolerance give me advice so there is no way I would do the same. I will assume you are much younger than I and gainfully employed.
Firstly, if you are busy making a dollar, which doesn't give you time to study the market, I think you have done well. You have a portfolio which, as near as damn it, will match the gross returns of the bulk of professionally managed funds based on the ASX, and you are not feeding the parasites. :good on 'ya:
This portfolio is unlikely to make you rich though. One day you will go outside the square and buy something outside the ASX 200 . Maybe not the first venture but soon enough you will put a few percent of your funds into it and it will return as much as the rest of the portfolio combined. You will be hooked and you will ask yourself why you are working. There is a point at which "making a living" interferes with "making a real dollar".
You're not there yet but be open to the possibility.
Sunfish firstly, it's posts from yourself and IV i enjoy reading most on this forum in relation to all things stocks related.
I'm a beginner investor (I look at all asset classes, theory about investing, not just the one eyed monster for say one asset class) and very keen to learn more, thats why i always post what i've done, what the numbers are etc. Not scared of coping flack from others, hopefully i can learn from it and become bigger/better.
I'm 23, Govt. Employed so yes my time frame is long term.
At the moment i use the morningstar website to do my research reading articles from their analysts, looking at the financial metrics of each company and well as my personal feelings towards the industry. I also have a look at the reports on the commsec website as well.
Can i just confirm you are talking about investing in smaller cap companies?
But yeah thanks for the info ill digest that
For someone who doesnt want to stare at a stockmarket screen all day, these are all suitable shares for a passive investor.
But that doesnt make them a 'buy and hold' for the long term.
In a nutshell, i would be keeping an eye on two overriding issues:
(a) pricing
(b) the economy.
Both of which doesnt involve excessive homework.
For pricing, keep an eye out for share prices to move to extreme levels of their valuation. If WOW starts to trade on a PE above 30, its a good indication that stocks are 'expensive'. At times like these its good to take a little money off the table (this is just an example with WOW, dont hold me to a PE of 30 before making a decision)
For the economy, share investors must remember that australia has not had a recession in 15+ years. This makes it very hard to know how a company will perform in difficult economic times. Some companies will be more susceptible to economic conditions than others (eg i would expect WOW to be effected less than the banks for example)
Remember at the end of the day a share investor is investing in a business. The returns will be dictated by the relationship between price of that business and the future profit of that business.
I'm retiring long before i can touch my super (does anyone know if i can get it earlier if i retire before 55?).
I have no doubt their is higher return in small caps, it's just im a beginner in the share market at the moment and learning. It will come with experience tho, same as it did for residential property.
I tried not to be specific. Clearly there are better percentage gains to be achieved with those outside the ASX 200 than within, if things go right. You can still do better than the fundies if your reading of the macro scene tells you to "go underweight banks, overweight consumer staples" (for example) and your judgement is correct.
You don't need to be a genius, just "open minded" and it should work for you.
and this is where i think you should conduct most of your energy in my opinion.
For an educated person, their wages are 'worth' roughly 10-20 times a passive investment stream.
In otherwords someone earning say $100,000 needs a capital comparison of between $1 to $2 million.
Now think of this for a moment, if one was to increase their salary through being an intelligent employee (as opposed to my frequently used intelligent investor) to say $150K, that would represent a passive capital equivalent of $1.5 - $3 million.
Thats an increase of passive capital of between $500K - $1million.
So the question is which is easier: to get that $50k pay rise or the additional $500k-$1million in capital.
Now to part II: the creation of alpha.
Alpha represents outperformance against the 'average' return of the asset class.
Generating long term alpha is bl**dy difficult.
A fund manager who creates long term outperformance of just a few % points is considered a rock star equivalent. Now think about that, just a few % points generated over the long term, and that person is hot property, they are an idol. For just a few % points.
But here is the good news:
a small investor has a greater chance of achieving alpha than a big funds manager because they are small. Their investment decisions have no impact on the market as a whole. A small investor can also have a longer time horizon which gives the investor time for his investment decisions to bear fruit.
So in my opinion keep doing what your are doing, learn as you go, build up that capital base. But concentrate on your day job. Your knowledge as an employee is your greatest asset.
One day when you have greater capital under your belt, you can try to go your own way and try to create that 'alpha'. But getting that 'alpha' is no free lunch, its still work, except this time you are using your own capital.
Hoppe this helps.
