Tag: Stock pick

Superannuation is naturally suited to long-term investing.

For many Australians, the money could remain invested for decades. That gives compounding plenty of time to work.

And I think some of Warren Buffett’s most famous investing principles fit that timeframe remarkably well.

Start with businesses you understand

Buffett has spent decades investing in companies whose economics he understands.

I think that is a sensible place to start when choosing ASX shares for a self-managed superannuation fund (SMSF).

Rather than chasing whichever sector is attracting the most attention, I would focus on businesses where I can clearly explain how they make money, why customers keep coming back, and what could make them more valuable over time.

That could include a major bank such as Commonwealth Bank of Australia (ASX: CBA), a resources giant such as BHP Group Ltd (ASX: BHP), or a healthcare business such as CSL Ltd (ASX: CSL).

The important point is not owning those particular companies. It is being able to understand the investment well enough to remain confident through inevitable periods of market volatility.

Look for lasting competitive advantages

Buffett has frequently focused on businesses with sustainable competitive advantages.

For an ASX investor, I would look for qualities such as strong brands, loyal customers, economies of scale, valuable technology, or services that would be difficult for competitors to replicate.

Pro Medicus Ltd (ASX: PME) is one example that comes to mind.

Its Visage medical imaging platform has become embedded within major hospital systems, where reliability and performance are extremely important. Replacing critical healthcare software is not something a hospital is likely to do casually.

That type of customer relationship can help a strong business keep growing for many years.

I think these are exactly the sorts of companies worth looking for when the goal is building wealth over decades rather than finding the next quick winner.

Let compounding do its job

Buffett’s extraordinary wealth was not created from one brilliant investment. A huge part of the story is the length of time his capital has been compounding.

Superannuation investors have an advantage here because retirement savings are usually invested over a very long period.

If a company can keep increasing its earnings, reinvesting successfully, and becoming more valuable, shareholders can benefit as that process continues.

This is why I would be reluctant to constantly trade a superannuation portfolio. A great business does not suddenly become a poor long-term investment because its share price has a difficult month.

Giving strong companies time can be one of the most important parts of the strategy.

You don’t have to pick shares

There is another Warren Buffett lesson I think is especially relevant.

Despite his remarkable success selecting individual companies, Buffett has repeatedly argued that most investors can do very well with a low-cost index fund.

Australians could apply that idea through a broad exchange-traded fund (ETF).

The Vanguard Australian Shares Index ETF (ASX: VAS), for example, provides exposure to hundreds of Australian companies through one investment.

An investor wanting greater international diversification could also consider a broad global fund or something like the iShares S&P 500 AUD ETF (ASX: IVV).

This approach removes the need to identify which individual companies will outperform. Investors can instead capture the returns generated by a large collection of businesses and concentrate on remaining invested.

That may sound less exciting than trying to find the next ten-bagger, but Warren Buffett’s philosophy has never been about making investing exciting.

It is about making sensible decisions and allowing time to work in your favour.

Foolish takeaway

I would not try to turn a SMSF portfolio into a replica of Berkshire Hathaway.

Instead, I would borrow the principles that have helped Warren Buffett invest successfully for decades: understand what you own, favour strong businesses, think long term, and avoid unnecessary activity.

For investors who enjoy researching shares, that could mean patiently owning a collection of high-quality ASX businesses.

For everyone else, a low-cost diversified ETF could make the process much simpler.

The post How to build your superannuation the Warren Buffett way appeared first on The Motley Fool Australia.

More reading

• Get paid huge amounts of cash to own these ASX dividend shares
• How much do you need invested in ASX dividend shares to replace a $90,000 salary?
• 233,577 shares of this high-yield ASX dividend stock pays an income equal to the Age Pension
• Up 109%! 3 reasons this ASX All Ords lithium stock is still a buy today
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Grace Alvino has positions in CSL, Commonwealth Bank Of Australia, and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway, CSL, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended BHP Group, Berkshire Hathaway, CSL, Pro Medicus, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I believe the ASX share market is the best place to find passive income opportunities due to the large dividend yields. ASX dividend shares are a great place to hunt for ideas.

When you combine a generous dividend payout ratio with franking credits, you can end up with an impressive dividend yield.

I’m going to highlight two listed investment companies (LICs) in this article, both of which offer impressive dividend yields.

LICs enable investors to invest in a portfolio of shares in a single investment. The structure allows the LIC to turn long-term investment returns into a steady (and rising) payout.

I’m going to talk about two of my favourites.

PM Capital Global Opportunities Fund Ltd (ASX: PGF)

This LIC targets global shares to generate impressive returns. Its investment focus can change over the years, but currently some of the themes it has invested in include European banks, industrial metals, healthcare, industrials, USA banks, consumer and staples, leisure and entertainment, and housing in Ireland and Spain.

It currently has 40 positions, which I think is ample diversification for a professionally-run portfolio.

Past performance is not a guarantee of future performance, but its portfolio has returned an average of 16.8% per year since December 2013. That level of return has allowed this ASX dividend share to deliver share price growth, a rising dividend and a good dividend yield.

Over the past year, the PM Capital Global Opportunities Fund share price has risen by well over 100%. Its annual dividend per share has been hiked every year over the past decade aside from FY23 when it maintained its payout. That’s an impressive record of reliability.

The business intends to hike its annual payout in FY27 by 10% to 16 cents per share. That translates into a grossed-up dividend yield of 6.8%, including franking credits, at the time of writing. I expect the future payouts will be even bigger.

WAM Leaders Ltd (ASX: WLE)

The other ASX dividend share I want to highlight is WAM Leaders, a LIC run by Wilson Asset Management (WAM) that targets large, quality ASX shares.

By being active with its holdings, rather than just passively holding the largest stocks, WAM Leaders has managed to deliver an average return per year of 12.1% since its inception in May 2016, outperforming the ASX share market by an average of close to 3% per year.

Currently, some of its ‘overweight’ investments are focused around real estate businesses and major property developers.

That investment style, as well as having a good understanding of macroeconomic conditions, has allowed WAM Leaders to hike its annual dividend per share every year since FY17.

Its latest annual dividend per share was 9.6 cents in FY26. That equates to a grossed-up dividend yield of 10.3%, including franking credits, at the time of writing.

The post Get paid huge amounts of cash to own these ASX dividend shares appeared first on The Motley Fool Australia.

More reading

• How much is needed in superannuation to target a $5,500 monthly passive income?
• This investment fund is paying a 7.2% dividend yield after solid results
• WAM Leaders lifts dividend as portfolio outperforms in FY26
• These ASX 200 shares could generate $10,000 per year in passive income
• How much is needed in superannuation to target a $2,000 monthly passive income?

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

Replacing a salary with ASX dividend shares is the goal that drives most income investing.

A $90,000 income is a realistic target for many Australians.

That level sits just below average full-time earnings, which reached $2,083.70 a week in May 2026, or roughly $108,000 a year before tax.

So what would it actually take to generate $90,000 without working for it?

Why ASX dividend shares can do the job

Australian companies pay out more of their earnings than almost anywhere else in the world.

Franking credits are the reason.

Our system refunds the company tax already paid on dividends, which encourages generous payout ratios and makes ASX dividend shares unusually effective for generating income.

The maths on a $90,000 income

Let us use a real fund rather than a hypothetical portfolio.

Vanguard Australian Shares High Yield ETF (ASX: VHY) tracks the FTSE Australia High Dividend Yield Index.

The ETF holds 92 companies, charges 0.25% a year and manages a little over $8 billion.

The fund carries a forecast yield of 4.2%, or 5.5% once franking credits are included.

At 4.2%, generating $90,000 in cash distributions requires about $2.14 million. On the grossed-up figure of 5.5%, the number falls to roughly $1.64 million.

That difference is entirely franking credits.

These credits arrive as a tax offset rather than as cash in your account, so the answer lies somewhere between those two numbers depending on your marginal rate.

What you would actually own

VHY ETF is concentrated by design.

Its largest holdings are Commonwealth Bank (ASX: CBA), BHP Group (ASX: BHP), Westpac (ASX: WBC), National Australia Bank (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ).

That is a portfolio dominated by the major banks and one very large miner.

Performance has been strong recently, returning 17.87% over the year to 31 July 2026, and 10.22% annually over the past decade.

Distributions are paid quarterly, which suits anyone trying to replace a fortnightly or monthly pay packet.

How long it would take to get there

Someone investing $2,000 a month at VHY’s decade-long return of 10.22% would pass $1.6 million in a little over 20 years.

Add a lump sum of $100,000 at the start and that timeline shortens by about three and a half years.

Reinvesting distributions also contributes to the compounding.

Drawing income early slows down your progress because every dollar spent along the way is a dollar that never compounds.

The catch with relying on ASX dividend shares

Dividends are not contractual.

Banks cut them in 2020, and miners cut them whenever commodity prices fall.

A 4.2% yield also assumes you never need to sell units to cover a shortfall.

Inflation is the other problem, and it is the one most income investors underestimate.

With the cash rate held at 4.35% and the Reserve Bank warning that inflation is still too high, a fixed $90,000 buys less every single year.

An income portfolio needs to grow its distributions, not simply pay them.

Foolish takeaway

Somewhere between $1.6 million and $2.1 million is the most representative answer.

That may sound like a large number, and it takes decades of contributions and compounding to reach.

The encouraging part is that you do not need to get there in one leap.

Reinvesting distributions along the way does most of the heavy lifting.

For anyone building toward financial independence, ASX dividend shares remain one of the most practical tools available.

The post How much do you need invested in ASX dividend shares to replace a $90,000 salary? appeared first on The Motley Fool Australia.

More reading

• 5 things Warren Buffett looks for before buying ASX shares
• 3 reasons to buy CBA shares following its results
• Bell Potter names the best ASX shares to buy in August
• Want income for life? Here’s how I’d build an ASX dividend portfolio
• How much is needed in superannuation for $1500 in weekly passive income?

Motley Fool contributor Mark Verhoeven has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group and Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Australian Age Pension is one of the most generous in the world, and that’s very appealing for retirees. However, I think the high-yield ASX dividend stock WCM Global Growth Ltd (ASX: WQG) is even more appealing.

WCM Global Growth is a listed investment company (LIC), though it’s not among the most famous. There are more famous names, such as Australian Foundation Investment Co Ltd (ASX: AFI) and Argo Investments Ltd (ASX: ARG).

The LIC seeks to invest in high-quality global stocks with improving economic moats and positive corporate cultures.

There are several compelling reasons to prefer the LIC to the Age Pension.

Rising dividends

I think one of the best reasons to like this LIC is how the high-yield ASX dividend stock is growing its payout at a significantly faster pace than inflation.

The business has provided guidance that it will keep hiking its quarterly dividend at a good pace over the next year.

It expects its June 2027 payment to be 13% higher than the June 2026 payment. The annual dividend per share has increased every year since 2019. Dividend growth is not guaranteed, but the future looks bright for payouts in the coming years.

Large dividend yield

The next year of dividends looks like it will be very rewarding for shareholders with a good dividend yield.

WCM Global Growth has guided that it will pay 9.59 cents per share over the next year, which translates into a grossed-up dividend yield of 6.5%, including franking credits, at the time of writing.

Plus, that’s just the starting dividend yield. The yield could continue to improve as the business grows.

Capital growth

Another reason to like this high-yield ASX dividend stock is that it’s delivering a rising share price for investors too. Of course, past performance is not a guarantee of future performance.

Not only is the business delivering excellent dividends, but its attractive returns are helping drive the WCM Global Growth share price higher with the retained investment money.

Since inception in June 2017, the LIC’s portfolio has delivered an average return per year of 15.9%. In the past five years, the WCM Global share price has risen by around 30% (and it’s up 70% in the past four years).

How many shares would it take to equal the Age Pension?

Currently, for single Australians, the maximum annualised Age Pension they can receive is approximately $31,200.

To receive that much over the next year would require 325,339 shares, not including the franking credits. If we include the franking credits, it would require 233,577 shares.

While I don’t have anywhere near that much invested in the high-yield ASX dividend stock, I do have a sizeable position because I’m bullish about its future ability to deliver attractive returns and continue growing its dividend.

The post 233,577 shares of this high-yield ASX dividend stock pays an income equal to the Age Pension appeared first on The Motley Fool Australia.

More reading

• How much is needed in superannuation to target a $5,500 monthly passive income?
• WCM Global Growth earnings: Profit lifts dividend and outlook
• How much is needed in superannuation to target a $40,000 annual passive income?
• How much do I need to retire on $100,000 a year at 60?
• How much is needed in superannuation to target a $2,000 monthly passive income?

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

ASX All Ords lithium stock Wildcat Resources Ltd (ASX: WC8) has more than doubled in value over the past 12 months.

Wildcat Resources shares were recently trading for 40 cents apiece, which sees the share price up a whopping 109.0% since this time last year.

For some context, the All Ordinaries Index (ASX: XAO) was recently up a rather meagre 0.8% over this same period.

Investors have been bidding up the ASX All Ords lithium stock as its Western Australian Tabba Tabba lithium project progresses towards production.

Wildcat will also have attracted attention amid the past year’s 79% increase in global spodumene (a lithium bearing ore) prices.

And looking ahead, Dolphin Partners Financial Services’ Arthur Garipoli believes the company is well-placed to deliver more outperformance (courtesy of The Bull).

Should I buy the ASX All Ords lithium stock today?

Citing the first reason he’s bullish on Wildcat Resource shares, Garipoli said:

This Western Australian explorer is advancing the Tabba Tabba Lithium-Tantalum project, which is a large-scale, hard rock development in an established mining jurisdiction with low sovereign risk and close to Port Hedland infrastructure.

The second reason you might want to buy the ASX All Ords lithium stock today is that, while the share price is up 109% since this time last year, the Wildcat share price has fallen more than 36% since closing at 63 cents on 18 June.

“The recent share price fall may represent a good entry opportunity for investors looking for a recovery in lithium markets and in a company with near term catalysts,” Garipoli noted.

There are also a number of upcoming catalysts that could help support further gains in the Wildcat share price.

Garipoli concluded:

WC8 has completed a pre-feasibility study. A large resource base and an upcoming definitive feasibility study de-risks the company. In our view, WC8 represents a compelling risk-reward scenario.

What’s the latest from Wildcat Resources?

Wildcat Resources released its June quarter update on 29 July.

The ASX All Ords lithium stock cited “significant advancement” across its Pilbara lithium portfolio. That included accelerated development activities at Tabba Tabba, with promising exploration results continuing to come in from the miner’s nearby Bolt Cutter lithium discovery.

Commenting on the Tabba Tabba project, Wildcat management noted:

At Tabba Tabba, the Definitive Feasibility Study (DFS) progressed across all major technical disciplines including mine planning, metallurgy, process engineering, infrastructure design, environmental approvals and project financing.

Optimisation work undertaken during the quarter identified opportunities to improve project economics through modifications to the proposed mine schedule, earlier expansion of processing capacity and incorporation of additional mineral resources that were not considered in the Preliminary Feasibility Study.

Metallurgical programs continued to demonstrate robust concentrate quality and recoveries, while engineering design advanced toward completion.

The post Up 109%! 3 reasons this ASX All Ords lithium stock is still a buy today appeared first on The Motley Fool Australia.

More reading

• Buy, hold, sell: Centuria Industrial REIT, Endeavour, Wildcat Resources shares
• Experts name 3 ASX shares to buy this week

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

It was a busy week for Australia’s top brokers. This has led to a number of broker notes being released. 

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

DigiCo Infrastructure REIT (ASX: DGT)

According to a note out of Bell Potter, its analysts have retained their buy rating on this data centre company’s shares with a trimmed price target of $3.35. The broker highlights that DigiCo announced its FY 2026 result last week with its underlying EBITDA of $126.6 million slightly above expectations. And while guidance for FY 2027 EBITDA came in below estimates, it believes a material capex spend and customer letters of intent points to earnings ramping up in FY 2028 as billing comes on line. It believes this should support a growing dividend. In addition, with its shares still trading at a deep discount to their net tangible assets, Bell Potter sees a lot of value in them. The DigiCo share price ended the week at $2.53.

Goodman Group (ASX: GMG)

A note out of Macquarie reveals that its analysts have retained their outperform rating and $35.40 price target on this industrial property company’s shares. This follows the release of an FY 2026 result that revealed operating earnings marginally ahead of consensus estimates. Once again, while its guidance for FY 2027 was a touch short of expectations, the broker appears confident it can outperform this and is expecting a double-digit three-year earnings compound annual growth rate. So, with its shares trading at a discount to its long-run PE ratio, Macquarie thinks now could be the  time to buy. The Goodman share price was fetching $27.27 at Friday’s close.

Megaport Ltd (ASX: MP1)

Analysts at Morgans have upgraded this network services company’s shares to a buy rating with a $25.00 price target. According to the note, Megaport delivered both FY 2026 earnings and FY 2027 guidance that were above market expectations. This reflects record network and compute growth. And while there are minor balance sheet concerns, Morgans believes the company will end FY 2027 with surplus liquidity of nearly $600 million. Outside this, it highlights that deals already contracted suggest that EBITDA will lift 3 times in FY 2027 and then more than double in FY 2028. The Megaport share price ended the week at $18.38.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

More reading

• Why Megaport, Lendlease and JB Hi-Fi shares all crashed 14% to 15% this week
• 8 ASX shares just upgraded by the experts
• 3 ASX shares UBS says will return better than 36%
• Buy, hold, sell: Fortescue, Northern Star, and Megaport shares
• Why were Goodman shares just downgraded?

Motley Fool contributor James Mickleboro has positions in Goodman Group and Megaport. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group, Macquarie Group, and Megaport. The Motley Fool Australia has recommended Goodman Group and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX 200 healthcare shares vastly outperformed their peers, rising 9.21%, as earnings season continued last week.

Pleasing FY26 reports from heavyweights CSL Ltd (ASX: CSL) and Pro Medicus Ltd (ASX: PME) turbocharged the sector.

The broader S&P/ASX 200 Index (ASX: XJO) slipped 0.62% over the week to 9,058.9 points on Friday.

Healthcare is in the middle of a rapid recovery following a 29% slump over the 12 months to early June.

The S&P/ASX 200 Health Care Index (ASX: XHJ) reached a 9-year low on 3 June.

The sector then pivoted as value investors rushed in to snap up blue-chips on the cheap.

Healthcare shares have skyrocketed 41% since 3 June, compared to a 3% rise for the ASX 200.

Let’s review some specifics from last week.

Healthcare shares led the ASX sectors last week

Last week, several major healthcare companies revealed their latest periodic earnings results.

The CSL share price leapt 23.3% to $168.30 on the strength of its FY26 results last week.

CSL shares have rocketed 82% since the healthcare sector rebound began on 3 June.  

Pro Medicus shares jumped 7.1% to $191.60 on the back of the company’s FY26 report.

The Pro Medicus share price is up 20% since 3 June. 

The Cochlear Ltd (ASX: COH) share price rose 1.4% to $135.48 following the hearing implant maker’s FY26 report.

Cochlear shares have increased 42% since 3 June.

The Healius Ltd (ASX: HLS) share price jumped 13.8% to 46 cents following its FY26 report last week.

Healius shares are up 38% since 3 June.

The EBOS Group Ltd (ASX: EBO) share price ascended 7.2% to $18.96 following the company’s FY26 results.

EBOS shares are up 20% since 3 June.

The Mesoblast Ltd (ASX: MSB) share price lifted 6.8% to $2.36 following a phase 3 trial update.

Mesoblast shares have risen 17% since 3 June.  

ASX 200 market sector snapshot

Here’s how the 11 market sectors stacked up last week, according to CommSec data.

Over the five trading days:

S&P/ASX 200 market sector	Change last week
Healthcare (ASX: XHJ)	9.21%
Materials (ASX: XMJ)	5.61%
Energy (ASX: XEJ)	3.5%
Utilities (ASX: XUJ)	0.85%
Communication Services (ASX: XTJ)	(1.41%)
Industrials (ASX: XNJ)	(2.08%)
Consumer Staples (ASX: XSJ)	(2.65%)
Information Technology (ASX: XIJ)	(3.57%)
A-REIT (ASX: XPJ)	(4.43%)
Financials (ASX: XFJ)	(5.11%)
Consumer Discretionary (ASX: XDJ)	(6.55%)

The post ASX 200 healthcare shares soar 9% amid notable FY26 reports from CSL, Pro Medicus appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• 16 ASX 200 shares with ex-dividend dates next week
• 3 ASX 200 stocks, including CSL, leaping 15% to 23% in this week’s sliding market
• 8 ASX shares just upgraded by the experts
• Why Guzman Y Gomez, Pro Medicus and James Hardie shares are turning heads on Friday

Motley Fool contributor Bronwyn Allen 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 CSL and Cochlear. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended CSL, Cochlear, and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Warren Buffett has built his fortune by buying shares in businesses he believes can compound wealth over many years. While the Oracle of Omaha doesn’t typically buy ASX shares, his investing principles can still help Australian investors identify potentially attractive shares.

Here are five things to look for.

Buy businesses you understand

Buffett has repeatedly stressed the importance of staying within his circle of competence.

That means understanding how a company makes money, what drives its earnings and what could threaten its competitive position.

On the ASX, that could mean favouring familiar businesses such as Commonwealth Bank of Australia (ASX: CBA), Woolworths Group Ltd (ASX: WOW) or Wesfarmers Ltd (ASX: WES), provided their valuations make sense.

The point isn’t to buy familiar names blindly. It’s to avoid investing in ASX shares you can’t properly assess.

A durable competitive advantage

Buffett’s famous economic moat is central to his strategy. I’d look for ASX shares with something that makes it difficult for competitors to steal customers and profits.

That could be a powerful brand, network effects, switching costs, intellectual property, scale or a structural advantage in an industry.

A company with a strong moat can potentially maintain attractive returns on capital for years.

Consistent earnings and cash flow

Great stories aren’t enough. I’d want to see evidence that a business can consistently generate profits and cash.

Strong cash flow gives companies more flexibility to reinvest in growth, reduce debt, pay dividends and potentially buy back shares.

This is particularly important when looking for long-term compounders. A business that repeatedly needs fresh capital to survive isn’t the sort of ASX share Buffett typically favours.

A strong balance sheet

Debt can magnify returns when things go well — and magnify problems when they don’t.

Buffett has long emphasised financial strength and the ability of businesses to withstand difficult economic conditions. I’d therefore examine a company’s debt levels, interest costs, cash position and ability to meet its financial obligations.

A robust balance sheet can give an ASX share the flexibility to take advantage of opportunities when weaker competitors are struggling.

A sensible valuation

Perhaps the biggest mistake investors can make is confusing a great business with a great investment. Even an exceptional company can produce disappointing returns if investors pay an excessive price.

I’d therefore compare the price of an ASX share with earnings, cash flow, growth prospects and the company’s historical valuation.

Buffett doesn’t try to predict what a share will do next month. He focuses on whether the price makes sense relative to the underlying business.

The Buffett test

Finding Buffett-style ASX shares isn’t about discovering a secret formula. I’d look for understandable businesses with durable moats, reliable cash generation, strong balance sheets and attractive valuations.

Then comes the hardest part: having the patience to let those businesses compound.

As Buffett’s strategy demonstrates, successful investing is often less about finding the next hot ASX share and more about avoiding bad businesses and paying too much for good ones.

The post 5 things Warren Buffett looks for before buying ASX shares appeared first on The Motley Fool Australia.

More reading

• How much is needed in superannuation to target a $5,500 monthly passive income?
• 3 reasons to buy CBA shares following its results
• Want income for life? Here’s how I’d build an ASX dividend portfolio
• How ASX dividend growth shares can build lasting income
• My top 5 ASX 200 shares to buy and hold

Motley Fool contributor Marc Van Dinther 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.

Some businesses make me comfortable looking well beyond the next year or two.

I think the three ASX shares below have strong positions in their markets and clear ways to keep growing for many years.

Here is why they would be on my long-term buy list.

REA Group Ltd (ASX: REA)

REA Group owns one of the most powerful digital platforms in Australia through realestate.com.au.

People looking to buy, sell, or rent property naturally want to use the website with the most listings. At the same time, property agents want to advertise where the largest audience is searching.

I think that gives REA Group a strong competitive position that would be difficult to replicate.

There is also more to the opportunity than simply attracting property listings.

REA Group can keep improving the tools available to buyers, sellers, and agents, including property data, personalised recommendations, and artificial intelligence. It can also build closer relationships with people as they move through the property journey, including when they need financing.

Australia should continue adding people and homes over the long term, giving REA Group an expanding market to serve.

For me, the combination of a powerful brand, enormous audience, and opportunities to make the platform more valuable makes REA Group a business I would be comfortable owning for many years.

SiteMinder Ltd (ASX: SDR)

Another ASX share I would buy and hold is SiteMinder. It gives hotels the technology they need to sell rooms and manage their presence across online booking channels.

I like the long-term opportunity because the global accommodation market remains highly fragmented.

Large hotel chains may have substantial technology budgets, but there are countless independent hotels and smaller accommodation providers that still need better ways to manage pricing, bookings, distribution, and guest relationships.

SiteMinder can bring many of those functions together through one platform.

I also like that the company has been expanding what its technology can do. Products such as Channels Plus and Dynamic Revenue Plus are designed to help hotels reach more travellers and make better pricing decisions.

Artificial intelligence could make those tools even more valuable by helping hotel operators automate more of the work involved in managing rooms and responding to changing demand.

If SiteMinder can keep adding properties while increasing the amount of technology each customer uses, I think the business could have a long growth runway ahead.

ResMed Inc (ASX: RMD)

ResMed is an ASX share operating in an area of healthcare where I think demand could continue expanding for decades.

The company develops devices and masks used to treat sleep apnoea, a condition affecting a huge number of people worldwide.

What I like is that the relationship with a patient can continue well beyond the initial sale of a device.

Masks and other components need replacing, while ResMed’s digital platforms can help patients and healthcare providers manage treatment over time.

That creates an opportunity to keep serving existing patients while also reaching people who have yet to be diagnosed or treated.

Greater awareness of sleep health could help with that. Improvements in diagnosis and easier access to treatment could bring more people into the market over the years ahead.

Foolish takeaway

The businesses I most enjoy owning are those where I can see several ways for the company to be stronger five or 10 years from now.

For me, REA Group, SiteMinder, and ResMed are three shares I would be happy to hold patiently for the long term.

The post 3 excellent ASX shares I would buy and hold for 10 years or more appeared first on The Motley Fool Australia.

More reading

• How I’d use ASX growth shares to build long-term wealth
• 16 ASX 200 shares with ex-dividend dates next week
• Buy, hold, sell: REA, Northern Star Resources, Suncorp shares
• 3 ASX shares I’d buy if I could only check my portfolio once a year
• How to find ASX shares that Warren Buffett might buy

Motley Fool contributor Grace Alvino 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 ResMed and SiteMinder. The Motley Fool Australia has positions in and has recommended ResMed and SiteMinder. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are various ways that Australians can invest in ASX shares for passive income. We can invest in our own names, through a company, a trust, superannuation and so on.

Investing for passive income through superannuation makes sense for various reasons, with the low tax rate being a key benefit.

Keep in mind that the net income we receive from our investments is what we receive after taxes. It’s possible that an Australian working full-time could lose a third of their passive income to tax, or more, depending on their tax rate.

Based on that, investing in superannuation is a more appealing prospect due to that lower tax rate.

Super has a lower tax rate in the accumulation phase compared to normal individual tax rates for a full-time earner. In retirement, the tax rate could be 0%.

Every Australian’s tax position is different, so I’ll just talk about targeting a certain income level, without mentioning tax any further.

How much is needed in superannuation for $5,500 of monthly passive income?

Receiving $5,500 per month of dividends translates into $66,000 annually. I’m sure most Australians would love to receive that level of dividends each year without needing to do any ongoing work for it, assuming they don’t already receive that much each year.

A key question is deciding what sort of investments Australians want to own and the dividend yield attached to those stocks.

For example, a portfolio with a dividend yield of 6.6% can be half the size of a portfolio with a dividend yield of 3.3%.

For example, if a portfolio is $1 million in size with a 6.6% dividend yield, it would create $66,000 of annual passive income. If a portfolio had a dividend yield of 3.3%, the portfolio would need to be $2 million in size to make the same level of income.

If the portfolio had a dividend yield of 5%, the portfolio would need to be $1.32 million in size to generate an average of $5,500 per month of monthly passive income.

The final dividend yield we’ll look at is 4%. It would take a portfolio value of $1.65 million to unlock $66,000 of annual dividends.

The sorts of ASX dividend shares I’d look at

There is a wide range of ASX dividend shares available for superannuation investments, investing in our own name or other structures.

Some of the lower-yielding stocks I’d look at are Wesfarmers Ltd (ASX: WES), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), L1 Long Short Fund Ltd (ASX: LSF) and Lovisa Holdings Ltd (ASX: LOV).

Some of the mid-range yielding stocks I’d consider for passive income include WCM Quality Global Growth Fund (ASX: WCMQ), Telstra Group Ltd (ASX: TLS), Rural Funds Group (ASX: RFF) and Centuria Industrial REIT (ASX: CIP).

Among the higher-yielding ASX dividend shares I’d consider are WCM Global Growth Ltd (ASX: WQG), Charter Hall Long WALE REIT (ASX: CLW), Dexus Industria REIT (ASX: DXI), Future Generation Australia Ltd (ASX: FGX), Future Generation Global Ltd (ASX: FGG) and PM Capital Global Opportunities Fund Ltd (ASX: PGF).

The post How much is needed in superannuation to target a $5,500 monthly passive income? appeared first on The Motley Fool Australia.

More reading

• Want income for life? Here’s how I’d build an ASX dividend portfolio
• If I invest $15,000 in Telstra shares, how much passive income will I receive in 2027?
• 16 ASX 200 shares with ex-dividend dates next week
• Rural Funds Group FY26 earnings: Asset sales boost profit
• How ASX dividend growth shares can build lasting income

Motley Fool contributor Tristan Harrison has positions in Future Generation Australia, Future Generation Global, L1 Long Short Fund, Rural Funds Group, Washington H. Soul Pattinson and Company Limited, Wcm Global Growth, and Wcm Quality Global Growth Fund. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Rural Funds Group, Telstra Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Lovisa and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.