Imagine having bought shares decades ago and watched the share price grow since. It always seems easier looking back – investment choices that look obvious in hindsight aren’t as clear cut when making future investment decisions. But there are some shares I’d be happy to buy and hold for years or even decades to come, for capital growth, income, or both.
Of course not all shares do well. But by diversifying across 10 choices, I’d expect some long-term winners. Here are 10 UK shares I’d buy and hold, using three different investment strategies.
Going for growth
S4 Capital is my share pick of the year. The company is in the sweet spot of digital advertising. Acquisition costs could impact its profitability, but I expect to hold S4 for a while. Another company that continues to grow is Games Workshop. With its Warhammer franchise, the company has a strong “moat” of the type Warren Buffett likes. Gaming customers can be loyal for years or decades as they build their collections. The share’s valuation has increased faster than the bottom line, which is a concern. However, I think the company is well-positioned to capture future growth. It also usually pays out dividends frequently, although that is subject to business performance and could change.
For a long-term perspective, I would also pick well-established blue chip UK shares whose businesses look set to trundle along consistently. For example, the consumer goods giant Unilever makes a range of household and personal care goods. It has similar characteristics to Buffett’s long-term holding Procter & Gamble: a broad customer base, international exposure, and resilience even in economic downturns. For the same reasons I hold British American Tobacco. The Lucky Strike maker is battling a long-term decline in smoking. However, the shares yield 7%, and I think tobacco will be around for a while yet. The downside to blue chip stocks is that they can be expensive.
Similarly, beer consumption is falling in some markets. That might not be good for Guinness, but its owner Diageo owns a host of other drinks brand like Johnnie Walker. I see it as a buy-and-hold for its strong brand portfolio and attractive business economics. UK bank Lloyds faces uncertain future demand for banking. But as the UK’s leading mortgage provider, I see its current price as a good chance to buy for future recovery.
UK shares with attractive niches
Buffett also likes businesses that do well in a niche market. Food producer Cranswick isn’t cheap but its long history of business growth is attractive to me. Victrex is also not cheap but I would still buy for the long term. I think its core specialty chemical business gives it pricing power.
Brick manufacturer Ibstock has its own clay pits. Bricks are heavy to transport which can make them expensive to move. A local brick manufacturer therefore has a naturally strong market position. Ibstock could suffer from building downturns but for the long term, I like it.
Finally, software group Kainos may be below the radar for some investors, but it has the wind in its sails. It is close to an all-time high after saying trading is strong. I would still pick these UK shares to buy and hold as I expect continued growth in Kainos’ end markets.
christopherruane owns shares of British American Tobacco, Lloyds Banking Group, and S4 Capital plc. The Motley Fool UK owns shares of Games Workshop. The Motley Fool UK has recommended Diageo, Ibstock, Kainos, Lloyds Banking Group, Unilever, and Victrex. 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.