Finding shares that will reward me for my long-term loyalty isn’t always easy. But I think I’ve found two FTSE 100 shares I could safely buy today and forget until 2031.
The companies in question are all at the smaller end of the FTSE index, with market caps of around £6bn. My hope is that they’ll deliver profit growth and rising dividends over the coming years.
Safer than houses
The share price of housebuilder Taylor Wimpey (LSE: TW) has fallen by around 25% over the last year. But I think this could provide me with a decent entry point for a long-term investment.
Housebuilding completions took a hit in 2020, but the company says its order book had grown to 10,685 home by the end of the year. That’s a 10% increase from the 9,725 homes reported at the end of 2019. This backlog of demand suggests to me that 2021 should be a decent year.
Despite this strong backlog, I can see some risks. If the pandemic is followed by a recession, demand could weaken. The Stamp Duty holiday is due to end shortly. Changes to the Help to Buy scheme this year could also hurt housebuilders, as they limit government support to first-time buyers.
However, I think these risks are probably priced into Taylor Wimpey stock already. At the time of writing, the shares look affordable to me, trading on 11 times 2021 forecast earnings with a dividend yield of 4.7%. I’d be comfortable adding Taylor Wimpey to my portfolio at this level.
The best FTSE 100 share to buy now?
What’s the best business in the FTSE 100? There’s no single correct answer. But I think that Bunzl (LSE: BNZL) would have to be a contender. This business provides cleaning supplies and many other essential items to workplaces all over the world.
This group isn’t exactly a household name, but it has a remarkable record. Bunzl’s profits doubled between 2010 and 2019. As far as I can see, the company has not cut its dividend since at least 1992. That’s a dividend streak of almost 30 years.
What could go wrong? Bunzl has benefited from exceptional demand for PPE and cleaning supplies over the last year. The company has already warned that it expects a decline in “larger Covid-19 related orders” over the coming year. A broader economic slowdown would also be a risk.
One of the secrets of Bunzl’s long-term success is its acquisition strategy. The company regularly acquires much smaller businesses operating in its sector. These can be rolled up into the company with little risk, adding to earnings each year.
No company is perfect and there’s no guarantee Bunzl’s long growth streak can be maintained. However, my view is that the essential nature of the products sold by the company should mean it remains a reliable long-term earner.
Looking ahead to 21, Bunzl shares trade on 17 times forecast earnings, with a dividend yield of 2.4%. In my view, this is probably a fair valuation for a good business. I’d be happy to buy this FTSE 100 share today.
