There are few ASX shares that I plan to hold til I’m 100.

The problem is that many businesses seem as though they’ll eventually become structurally challenged or at least we can’t have enough conviction in their long-term prospects.

There are two ASX shares in my portfolio I plan to hold until I’m 100, essentially forever.

Here are my two ideas:

Long-term ASX share 1: Rural Funds Group (ASX: RFF)

Rural Funds is a farmland real estate investment trust (REIT). It owns a diverse portfolio of different farm types including almonds, cattle, macadamias, vineyards and cotton.

One of the main reasons why I’m confident about holding this share for the long-term is that farmland has already been around for many centuries which should mean it’ll be okay for the next few decades. The way most of us eats food isn’t going to change any time soon. I believe that farmland is going to be integral for many years to come. 

It aims to increase its distribution by 4% each year to unitholders, so that’s not exactly rocket-like growth, but it’s comfortably higher than inflation and you get a solid starting yield.

I like the Rural Funds strategy of buying properties that it can re-invest into and add productivity improvements at the farms. It’s doing this well with cattle farms at the moment.

As long as the balance sheet remains relatively conservatively geared I think Rural Funds can be an excellent ultra-long-term ASX share which keeps producing a stream of cash distributions for investors. It currently has a forward distribution yield of just over 6% which is solid in today’s low interest coronavirus world.

Share 2: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is an investment conglomerate ASX share that has been listed since 1903. Think of all the things that it has already been through to get to this point. It’s survived through the Spanish Flu, two world wars and all the various recessions.

The conglomerate has a diversified asset base with investments in various industry like telecommunications, resources, property, building products and pharmacies.

Soul Patts regularly invests into new industries. It recently invested a sizeable amount into agriculture and it’s now looking to invest into regional data centres.

It’s already been around for a century and Soul Patts has paid a dividend every single year in that history. Its dividend is funded from the investment income it receives, where it retains some profit which it will use for future investment opportunities.

The current grossed-up dividend yield of 4.7%.

Foolish takeaway

Out the two ASX shares, Soul Patts would be my clear favourite. It’s much more diversified, has a cheaper cost structure, a much longer history and more investment flexibility. I’m looking to buy more shares of Soul Patts if it drops below an $18 share price.

More reading

• 3 Warren Buffett ASX dividend shares to buy right now
• 3 ASX shares to instantly diversify your portfolio
• 3 industries that may never recover from COVID-19
• Beat falling rates with these strong ASX dividend shares
• Buy these ASX 200 shares for your kids today

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED 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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One of the most common questions I hear from ASX dividend share investors is around how to build a portfolio that can provide tax-advantaged income.

The way our dividend system is structured in Australia is actually fairly unique in the world – and gives investors the opportunity to harvest income in an advantaged way.

But many investors don’t realise this and make decisions with their investing which negate these benefits and can even end up eroding their overall returns.

So let’s look at how ASX shares are taxed, and how you can use this to your advantage. Remember though – this is just general information. You should always speak to a tax professional about your individual circumstance as well.

How are ASX shares taxed?

When you own ASX shares you will face two types of tax: capital gains tax and income tax.

Capital gains tax is only levied when you buy an ASX share and sell it at a later date for a profit. In most circumstances, you get a discount on this gain if you have held the shares longer than a year. And if you never sell a share, you never have to pay tax on its gains – something to keep in mind.

For shares that don’t pay dividends, that’s the end of the story. But if you hold shares that do (which is likely for many ASX investors), you will also pay income tax.

See, dividends are taxed as ordinary income. This means you’ll have to add the dividends you receive each year to your total income, which is then taxed at your marginal rate.

But there’s another aspect to dividend taxes that some investors overlook: franking credits.

How franking can help you pay less tax

If a company pays a dividend in Australia, it usually does so from a pool of cash that has already been taxed by the government. Therefore, if the government taxes the dividend again when you receive it as income, it will have been taxed twice. To remove this double-tax, the dividend will come with a ‘receipt’ of the tax that’s already been paid. That receipt is known as a franking credit. Depending on how the company has paid its tax, and in which country it earns its income, dividends may be distributed fully franked, partially franked or with no franking credit at all. 

Franking credits can be used to offset other income as a deduction, effectively reducing the tax you have to pay on said income. In this way, receiving dividends is a very tax-effective way to make money. This is particularly relevant in retirement when you no longer have work-related deductions to offset your income tax.

Foolish Takeaway

Of course, some investors don’t really worry about dividends and prefer to stick with growth shares to try and maximise capital gains. But for those investors who invest for income, or even those who are happy with any kind of return, dividends can be a great way to receive income that comes with tax advantages like franking. So make sure if you invest for dividends, you know the full extent of the benefits that come with them!

More reading

• Top brokers pick the latest ASX stocks to buy today
• Is it time to buy ASX banks?
• 2 ASX shares I plan to hold til I’m 100
• ASX 200 market close: Share market up 1.8%
• Here’s why the Fortescue share price hit an all-time high today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The S&P/ASX 200 Index has ended up 1.8% today at the market close.

There are plenty of ASX shares that have soared in reaction to the news that a vaccine is showing very early promising signs. Investors love good news so share markets soared overnight and today the ASX has followed.

Some of today’s biggest ASX 200 movers

The Unibail-Rodamco-Westfield (ASX: URW) share price went up 11.4% today.

Worley Ltd (ASX: WOR) saw its share price jump by 9.6%.

The Nearmap Ltd (ASX: NEA) share price rose by 9%.

The oOh!Media Ltd (ASX: OML) share price grew by 8.6%.

COVID-19 conditions have caused cyclical and retail shares like shopping centres and businesses relating to advertising to be sold off. Today seems to have been a signal for some investors to jump into shares that have been most heavily affected. And something like Worley might benefit from the higher oil prices. 

James Hardie Industries plc (ASX: JHX) share price jumps

The James Hardie Industries plc (ASX: JHX) share price increased by 11.2% after announcing its result.

The compared reported group adjusted net operating profit of US$352.8 million for the full year, an increase of 17% compared to the prior corresponding period. Net sales of US$2.6 billion for the full year, this was an increase of 4% compared to last year.

Reported net profit increased by 6% to US$241.5 million. The ASX 200 share’s result was solid given the environment.

Tabcorp Holdings Limited (ASX: TAH) update

The ASX 200 gambling’s share price rose 2.5% today after giving an update.

Tabcorp said that it has secured agreements for a waiver of leverage and interest cover for the next two testing dates, but it won’t pay a final FY20 dividend.

It’s also in advanced discussions with its US private placement holders to obtain changes to existing covenants.

At 15 May 2020 it had $820 million of available liquidity of undrawn facilities and unrestricted cash. This compares to $749 million at 3 April 2020.

More reading

• ASX 200 storms 2% higher: Big four banks jump on COVID-19 vaccine news
• Why James Hardie, Oil Search, Webjet, & Westpac shares are jumping higher
• This is the latest ASX 200 stock to unveil double digit profit growth
• ASX gambling shares on watch as sporting codes make plans to resume
• These mid cap ASX shares could grow into large caps in the future

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia has recommended oOh!Media Ltd. 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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