Looking for ASX shares with strong long-term growth potential?
I believe that the following 2 ASX shares are worth considering, and falls in their share prices over the past few months add to their appeal.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Some of our leading companies on the S&P/ASX 200 Index (ASX: XJO) that are normally viewed as strong and consistent dividend payers have either suspended or reduced their next dividend payments this year. This includes the likes of Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and National Australia Bank Ltd. (ASX: NAB). However, there are so far no indications that ‘Soul Patts’ will follow down this path.
Soul Patts currently offers an attractive fully franked grossed-up dividend yield of around 4.7% and has increased its dividend every year since 2000. The group keeps a meaningful amount of cash on its balance sheet and this cash can be used as a buffer in difficult operating times. Soul Patts funds its dividends from its net regular cashflow and its next dividend is expected to be similar to the prior year for FY 2020.
This strong balance sheet also places it in an ideal position to capitalise on any worthwhile investment opportunities if they suddenly arise, which is one of the reasons why I think Soul Patts has strong long-term growth potential. These growth prospects are also supported by its excellent management team and strong diversification across a broad range of industries.
Blackmores Limited (ASX: BKL)
There is no doubt that Blackmores’ recent financial performance has been somewhat disappointing.
In its most recent half-year results back in February, Blackmores revealed a 20% revenue decline in its Australia and New Zealand segment and the company’s China segment saw revenue drop by 6%. However, on a more positive note, the company does now appear to be getting its business back on track again after its entry strategy into China, in particular, has struggled in recent times.
Blackmores has put in place plans to strengthen its Australian business as it realigns its overall business strategy, which includes plans to further extend its investments into China. The company also plans an increased focus on the Indonesian market and aims to enter the Indian market within the next 12 months.
Blackmores’ management has also reported the coronavirus pandemic has resulted in a spike in demand for vitamin C and other immunity products both in Australia and internationally.
I believe that the coronavirus pandemic could potentially even change the mindset of some consumers to the benefit of supplements, leading to higher demand in the years ahead.
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More reading
- Safe dividend stocks to buy today for the COVID-19 world
- 3 top ASX 200 shares you can buy on sale today
- 3 ASX 200 value plays for an economy hell-bent on recovery
- 5 things to watch on the ASX 200 on Wednesday
- ASX 200 drops over 1% at the market close
Motley Fool contributor Phil Harpur owns shares of Australia & New Zealand Banking Group Limited, Blackmores Limited, and Westpac Banking. The Motley Fool Australia owns shares of and has recommended Blackmores Limited and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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