I believe that there are some really quality potential ASX share investments for investors to look at.
I’m talking about businesses that have very strong positions in the country that they operate in. They could be described as the best in their industry at what they do.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is a leading business in the retail space.
If Bunnings were listed as its own separate business, it’d be one of the best retail businesses on the ASX. Perhaps one of the best overall. It earns high returns on shareholders’ capital, has an impressive level of demand (even in downturns) and still has plans for growth. It recently acquired Beaumont Tiles to increase its diversification and earnings.
Catch is another part of the business that has a very exciting future in the online retail space. More retail is going to be done online and it’s good for Wesfarmers to own one of the leading businesses in that space.
Kmart and Officeworks are also category leaders with plenty of compound growth potential over the next five years.
What I particularly like about Wesfarmers is its flexibility to invest into other businesses and industries. For example the expansion into lithium seems like a smart diversification move.
It also ticks the box of being a good dividend idea. Wesfarmers is committed to shareholder returns and typically pays a handy dividend payout ratio.
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
This is one of my favourite exchange-traded funds (ETFs) on the ASX. Although it doesn’t actually invest in any ASX shares itself.
The investment decisions are made by Morningstar analysts. They only pick from a watchlist of shares that they believe have strong competitive positions and that the ‘moat’ will be around for many years to come.
From that shortlist, the analysts only select businesses that are attractive value compared to their estimate of fair value.
At the moment, that translates into a portfolio with names like: Servicenow, Alphabet, Pfizer, Microsoft, Tyler Technologies, Facebook, Wells Fargo, Medtronic and Guidewire Software.
The portfolio is diversified across industries and it has done very well over the longer-term. Over the last five years, VanEck Morningstar Wide Moat ETF has returned an average of 19.3% per year. That’s after the annual fee of 0.49%.
It does pay an annual distribution, so it can somewhat count as an idea for income, though the yield usually isn’t very high.
