Think back a decade. When I do that, I remember missed investment opportunities. There are some top UK stocks today I wish had bought back then.
But every decade has its winners and losers. I think there are UK shares I could buy for my portfolio today and hold, hoping for growth in the coming 10 years. Here are two of them.
Proven growth champion
Few people are as focussed on winning as much as sports fans. So it makes sense that among top UK stocks over the past decade, one that produced strong growth was sports retailer JD Sports (LSE: JD).
The company has been able to grow revenues and profits over the past decade thanks to its well-honed formula. From a compelling selection of brands to economies of scale, JD’s simple but well delivered approach to business hits the back of the net.
Last month it raised its profit forecast for the year. It now expects pre-tax unadjusted profits of £550m for the year. But any further lockdowns could damage revenues in its retail outlets. That would likely hurt profits.
Top UK stocks
JD Sports may only yield 0.2% but its growth story attracts me for the coming decade.
The shares are 50% higher than they were a year ago. Despite the JD Sports price rising sharply, company managers still seem to see value. Last month, for example, the company’s executive chairman spent £430,000 adding to his pile of JD shares. I also see continued upside potential here. I would consider buying JD Sports today to buy and hold in my portfolio for the coming decade.
Cheers to continued success
Among top UK stocks, drinks maker Diageo (LSE: DGE) has also had a sparkling share performance over the past year. The Diageo share price increase of 25% in the past year, while only half that seen at JD Sports, still comfortably outperformed the FTSE 100 average.
The stocks of whisky held by the producer of Johnnie Walker typically become more valuable over time. I believe the shares could do the same, thanks to Diageo’s business model. Its portfolio of premium brands, which also includes Gordon’s and Guinness, allows it to achieve pricing power. That often translates into strong profits. Last year, for example, Diageo reported earnings per share of £1.14. It paid a dividend of just under 73p per share.
2% yield on top UK stocks
The company has raised its dividend annually for over three decades. While dividends are never guaranteed, I like the management’s demonstrated commitment to shareholder returns. At the moment, the yield on Diageo shares is 2%.
There are risks, though. A decline in alcohol consumption among younger consumers could hurt both revenues and profits. The company is moving into non-alcoholic brands such as Seedlip, but it remains to be seen if that will help avert the challenge from teetotal habits.
Moving to action
Looking ahead a decade, some top UK stocks will have provided handsome returns. Nobody knows which ones yet. But hunting for quality seems like a good idea to me.
JD Sports and Diageo share common characteristics. They are well run and have a history of revenue growth. Both are consistently profitable. I see strong growth potential for both over the next 10 years. I will consider buying them for my portfolio and holding them.
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Christopher Ruane has no position in any shares mentioned. 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.