Warren Buffett has built one of the greatest investing records in history by owning high-quality businesses for very long periods.

Of course, we cannot know which ASX shares Buffett would actually buy. He may look at the Australian market very differently from me, and price would also play a major role in any investment decision.

What we can do is look at the types of businesses he has historically favoured and ask which ASX shares appear to share some of those characteristics.

Here are three that stand out to me.

Wesfarmers Ltd (ASX: WES)

One trait I associate strongly with Buffett is a preference for businesses that are relatively easy to understand.

Wesfarmers certainly fits that description in my opinion.

Its portfolio includes consumer businesses such as Bunnings, Kmart and Officeworks, which sell products millions of Australians regularly buy. These are established brands with large customer bases and strong positions in their respective markets.

I think Bunnings is particularly interesting from a Buffett-style perspective. Its scale, brand recognition and store network would be extremely difficult for a new competitor to replicate.

Wesfarmers also has a long history of allocating capital across different businesses. That is another characteristic I would look for when trying to identify a company Buffett might appreciate. Strong management teams can create significant value when they have the discipline to invest heavily in attractive opportunities while avoiding poor ones.

The price still has to make sense, but I think Wesfarmers has many of the business qualities I would expect a Buffett-style investor to value.

REA Group Ltd (ASX: REA)

Buffett has often invested in companies with powerful competitive advantages.

REA Group is one ASX share I think fits that profile particularly well.

Its realestate.com.au platform has become an important part of the Australian property market. Buyers naturally want to search where the largest number of properties are listed, while sellers and real estate agents want to advertise where the largest audience is looking.

That creates a powerful network effect. As more buyers use the platform, it becomes more valuable to advertisers. That in turn can attract more listings, which helps keep buyers coming back.

Businesses with this type of competitive advantage can potentially protect their market position for a very long time.

REA Group also benefits from a relatively capital-light digital business model, meaning growth does not necessarily require huge spending on physical assets.

For me, those qualities make it the kind of ASX business that deserves a closer look through a Buffett-style lens.

CSL Ltd (ASX: CSL)

Another Buffett characteristic I would look for is a business with a sustainable leadership position in an industry where replacing an established operator would be difficult.

CSL fits that description for me. The healthcare company has spent decades building its plasma collection network, manufacturing capabilities, scientific expertise and relationships across global markets.

Those assets cannot simply be recreated overnight.

Demand for many of CSL’s therapies is also connected to serious medical needs, giving the business exposure to healthcare demand that can persist through different economic environments.

There is also potential for long-term growth as the company expands production, develops new therapies and reaches more patients around the world.

CSL is more complicated than some classic Buffett investments, but I think its competitive position, global scale and long-term focus give it several qualities he has historically looked for in businesses.

Foolish takeaway

Trying to guess exactly what Warren Buffett would buy is unlikely to get investors very far.

I think the more valuable exercise is studying the qualities behind his investments.

Strong competitive advantages, understandable business models, capable management and the ability to generate attractive returns over many years are all characteristics worth looking for.

Wesfarmers, REA Group and CSL each appear to tick several of those boxes in my view.

The post How to find ASX shares that Warren Buffett might buy appeared first on The Motley Fool Australia.

More reading

• Why is everyone talking about CSL, Pro Medicus and BHP shares on Tuesday?
• Here’s what brokers tip for Wesfarmers shares over the next 12 months
• How much do I need in my superannuation to earn $50,000 per year in passive income?
• 3 reasons to buy this rebounding ASX 200 dividend stock today
• CSL earnings: FY26 sees reset and path to future growth

Motley Fool contributor Grace Alvino has positions in CSL and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Wesfarmers. The Motley Fool Australia has recommended CSL and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Wesfarmers Ltd (ASX: WES) shares have fallen into the red in early morning trade on Tuesday.

At the time of writing, shares in the conglomerate – whose retail subsidiaries include Bunnings Warehouse, Kmart Australia, Officeworks, and Priceline – are down around 1.5% and are changing hands for $83.58 a piece.

Today’s decline follows a 4% drop in the share price yesterday.

Interest rate and inflation concerns, and cost of living pressures have acted as strong headwinds for the company so far this year. 

Wesfarmers shares have been pretty volatile for the year-to-date, swinging anywhere between an annual low of $71.26 in mid-May and a high of $92.96 in mid-July.

The shares are now around 2% higher for the year-to-date but still 7% lower than a year ago.

For context, the S&P/ASX 200 Index (ASX: XJO) is up around 4% for the year-to-date, and roughly 1.5% higher than 12 months ago.

What do brokers tip next for Wesfarmers shares?

Wesfarmers is due to announce its FY26 results on the 27th of August. 

Investors are eager to find out Wesfarmers’ FY26 key group financial metrics and final dividend size. The result is expected to influence the direction of Wesfarmers shares and sentiment about the company’s outlook.

Wesfarmers has already paid a fully-franked interim dividend of $1.02 per share. Consensus estimates point to a final FY26 dividend of around $2.20.

It looks like the experts are pretty bearish on the outlook for Wesfarmers shares ahead of its results announcement.

According to Market Index data, the majority of brokers have a sell rating on the conglomerate’s shares. The $78.16 average target price implies a potential downside of around 7% at the time of writing.

The data is similar on TradingView. Again, the majority (nine out of 15) have a strong sell rating on the consumer discretionary shares. However five still think the shares are a hold and one analyst rates the stock as a buy.

The average $77.56 target price implies a downside of around 7%, at the time of writing. Although some think that the shares have the potential to fall up to 22% to $65.10 over the next 12 months.

Morgan Stanley has a sell rating and a $79 price target. The broker recently warned that the rally in consumer discretionary stocks has “run ahead of fundamentals and is unlikely to prove durable”.

Alto Capital’s Tony Locantro also has a sell rating. He thinks that much of Wesfarmers’ quality and long-term growth outlook is already fully reflected in the current valuation. He added that future upside may be constrained by elevated market expectations.

The post Here’s what brokers tip for Wesfarmers shares over the next 12 months appeared first on The Motley Fool Australia.

More reading

• How to find ASX shares that Warren Buffett might buy
• Reporting season half-time report: 5 lessons from August so far
• How to build a strong ASX retirement portfolio with 10 shares
• Which is the best Vanguard ETF? VAS, VGS and VDHG compared
• Why I’d buy these 2 ASX ETFs for $10,000 a year in passive income

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Your superannuation is more than just a pot of savings to fund your retirement. It can also generate a regular passive income once you retire and transition to the pension phase. 

But exactly how much superannuation do you need to be able to earn passive income as high as $50,000 every single year?

Let’s investigate.

How much do I need in my superannuation to generate an annual $50,000 passive income?

The calculation is simple. You need to divide your annual passive income by the dividend yield of your total portfolio, and it’ll give you the amount you’ll need to invest.

The tricky part is that the answer varies significantly depending on your portfolio’s actual yield.

That means a 3% yielding superannuation portfolio would need to be double the size of one that yields 6%.

For $50,000 in passive income on a portfolio yielding 3%, you’d need a superannuation balance of around $1.66 million, because $50,000 ÷ 3% = $1,666,666.

Then, if your portfolio yields closer to 4%, you’d need a superannuation balance closer to $1.25 million to earn the same passive income.

To earn $50,000 per year on a 5% yielding portfolio, your balance would need to be around $1 million.

Increase that to 6%, and you’d need more like $833,000.

If you go higher again to 7% or 8%, you’d be able to earn $50,000 in annual passive income from a $714,000 or $625,000 balance, respectively.

And so on. The higher your yield is, the lower your superannuation balance needs to be.

Can’t I just invest in the highest-yielding ASX shares so that I can earn the same amount off of a lower superannuation balance?

Yes, but it doesn’t make good investment sense. 

When it comes to ASX dividend shares, generally the higher the yield, the higher the risk associated with that stock.

Ideally, you want a diversified portfolio of a range of good-quality ASX shares from different sectors and with a variety of different yields. 

And remember, you don’t need to invest the whole sum in one go. Start with a monthly investment and let compound growth do some of the hard work for you.

Give me some examples of ASX shares that I could look at

ASX blue-chip shares like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and CSL Ltd (ASX: CSL) all yield around the 3% level.

If you want something that yields a little higher, at around 4% or 5%, my picks would be something like Telstra Group Ltd (ASX: TLS), Endeavour Group Ltd (ASX: EDV) and NIB Holdings Ltd (ASX: NHF).

Then, for higher-yielding ASX shares, my picks would be APA Group (ASX: APA), Metcash Ltd (ASX: MTS), Fortescue Ltd (ASX: FMG), or Lendlease Group (ASX: LLC). At the time of writing, these shares yield between 6% and 8%.

The post How much do I need in my superannuation to earn $50,000 per year in passive income? appeared first on The Motley Fool Australia.

More reading

• Buy, hold, sell: Aristocrat, Telstra, ANZ shares
• Why is everyone talking about CSL, Pro Medicus and BHP shares on Tuesday?
• How to find ASX shares that Warren Buffett might buy
• How many BHP shares do I need to buy for $1,000 per month of passive income?
• BHP Group posts record FY26 earnings and flags copper-led future

Motley Fool contributor Samantha Menzies has positions in BHP Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has positions in and has recommended Apa Group, NIB Holdings, and Telstra Group. The Motley Fool Australia has recommended BHP Group and CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.