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4 UK shares I’d pick to buy and hold for dividends

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Trading shares frequently can be exhausting. Plus it can eat into returns due to commission. A lot of wise investors buy into great companies then tuck the shares away for decades. Here are four UK shares I’d buy now.

Long-term dividend payers

Diageo is well-known for its drinks such as Smirnoff and Guinness. Something equally tasty to me is its dividend history. The company has raised dividends annually for over three decades. It currently yields 2%, which isn’t massive but would be welcome income nonetheless. With its long history of dividend raises, I would hope that the dividend will continue to grow in coming years.

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I expect its portfolio to continue growing for decades. The company has been acquisitive, picking up new brands such as Aviation Gin to stay current as drinking trends change. One concern I do have about the company is whether a shift towards healthier lifestyles could damage demand for alcohol. For a company as exposed to alcohol as Diageo, that could be a significant dent to the business model.

Tobacco giant British American Tobacco has also increased payouts each year for several decades. Indeed, it announced today that it would raise the full-year dividend again by 2.5%.

Like Diageo, it has a global portfolio of well-known brands, like Rothmans. Its latest dividend rise was supported by a double-digit rise in operating profit, which I find impressive. However, demand is expected to fall long term. Revenue slipped in the past year, albeit only by 0.4%. More revenues falls in future could damage profits too. The company has some pricing power and is extending into cigarette alternatives, but it’s not clear yet if they will ever be as profitable.

After the shares pulled back following the results, the company now yields 8%. It’s one of my UK shares to buy for dividends and I am considering expanding my position.

A serial dividend raiser

Less-well-known but also attractive to me is conglomerate DCC. This is another serial dividend grower, which has raised its dividend steeply for many years. The most recent increase was smaller than the years before, but still came in at an attractive 5%.

DCC yields over 2%. Its management is top notch, with a long focus on shareholder returns. So while a 2% yield isn’t that big, I’m hopeful the company will keep raising the payout regularly.

But I’m aware that the company is exposed to markets like domestic gas, where future demand is uncertain. It also trades in a number of markets, so profits can be affected by swings in exchange rates.

A well-known insurer among my UK shares to buy

Finally, insurer Legal & General is a household name. That brand recognition helps its business, I feel. But the shares continue to offer value in my view, paying a dividend yield over 6%. I’d pick them now as UK shares to buy. I see the insurance market as fairly stable, so unless there are unexpected events I expect the dividend to keep rising in years to come. So far, Legal & General hasn’t followed rival Aviva in reducing its dividend but if profits fall in future, it could do.

For me right now, it’s among a basket of UK shares to buy and hold for dividends.

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christopherruane owns shares of British American Tobacco. The Motley Fool UK has recommended Diageo. 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.

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