The Motley Fool

2 family-owned businesses to retire on

We here at the Motley Fool tend to love founder-led companies as they normally mean great management teams with a huge incentive to run the company well over the long run. Sadly, they aren’t many of them left these days, but of the few that are left a handful make a compelling investment thesis.

Arbitrage at its best 

The first one on my list is Mountview Estates (LSE: MTVW). Its founder no longer runs this £400m market cap company but this is entirely forgivable as it was established all the way back in 1937. Furthermore, the company is now run by the co-founder’s son and he and the wider family own around half of all outstanding shares, giving them plenty of skin in the game.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Befitting a family-run company with a long history, its business model is buying at a steep discount buildings with flats that have regulated rents below market value and then waiting, sometimes decades, for these flats to become unoccupied and selling them on at market value.

While no new regulated tenancy properties have been created since 1988, the company still has a very large and constantly evolving portfolio of just under 4,000 properties as of the end of fiscal year 2016. Since around half of all its properties are in London and another 33% in the Home Counties, it has benefited from rising property values there.

In each of the past four years rising sale prices have led to double-digit increases in earnings and allowed dividends per share to nearly double to 300p in 2016. This is still a very conservative one-third of earnings, but shareholders still enjoyed a respectable 2.7% annual yield.

Management’s conservative approach to shareholder returns also carries over to its policy towards debt as the gearing ratio was a very low 11.8% at year-end. This healthy balance sheet means the business is in a good position to benefit from any downturn in the property market as it will have the financial firepower to make deals at an even deeper than normal discount.

Shares of Mountview are pricey for a property firm at 12 times trailing earnings but with a very long history of rewarding shareholders since going public in 1960 I reckon this business is one to hold for the long term.

A truly long term outlook

Another family-run business with a long history of keeping shareholders happy is iron foundry Goodwin (LSE: GDWN). Despite being set up in 1883, it is still run by a Goodwin and the family retains a large stake.

It has been in a holding pattern in the past few years as the downturn in oil, gas and commodities prices has significantly dampened demand for the company’s valves, pumps and other industrial products. However, management has been through many, many downturns before and was prepared for this one.

It has invested in recent years in expanding its capabilities into creating products for the aerospace, jewellery and automotive industries that are paying off and keeping it highly profitable even during the downturn in energy markets. In the nine months to January the diversification helped increase sales from £87m to £105m year-on-year, although pre-tax profits fell from £9m to £8.2m.

With a long history of adapting to ever-changing market demands and a proven ability to withstand very deep market downturns Goodwin is one share I’ll be looking at more closely once energy markets rebound.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Ian Pierce has no position in any shares mentioned. The Motley Fool UK owns shares of Mountview Estates. The Motley Fool UK has recommended Goodwin. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.