In choosing a portfolio of UK shares, I am drawing inspiration from Prince Harry and his autobiography, Spare. In short, my portfolio always looks to have an ‘heir and a spare’.
Let me explain.
Heir and a spare investing
In his book, Prince Harry argues that having two children in royalty is an insurance policy. The heir is destined for greatness, the spare (such as Harry) is an insurance policy, just in case anything happens to the eldest.
How does that translate to a portfolio of UK shares? It all comes down to two approaches to investment.
Firstly, I have shares I believe are destined to lead my portfolio growth and dividends – the heirs.
In my case, this includes Unilever (LSE: ULVR), National Grid and GSK.
The heir
For example, Unilever shares are a solid foundation for building my portfolio, both through long-term growth and through dividends.
That’s because it underpins people’s lives. From cooking to cleaning, its brands include everything from Ben and Jerry’s ice-cream and Knorr stock cubes to Comfort, Dove, and Domestos.
It has more than 400 brands that are household names, of which 13 have sales of around £1bn. 81% of its brands are the top two in their markets. It’s even leading the way in developing plant-based foods as meat alternatives.
Like any share, it is prone to rises and falls, but the changes tend to be slow and steady. Its long-term performance is strong, with its shares rising around 18% in the past year. There is also a healthy dividend yield of 3.5% to smooth out stock price changes.
There are no guarantees on future performance, but quarterly dividend payments keep me updated on its value for money.
The spare
Now it’s onto the spare. In the case of investing, my approach is to look for something a little more risky. I choose shares that have potential, although I am ready to sell if things don’t work out.
In this case, I have my eyes on bookmaker 888 Holdings (LSE:888). It had a significant fall from grace in the past year, when its share price fell by more than half.
Furthermore, it has announced its chief financial officer is leaving, which is always a time of uncertainty for a business and investors.
Total revenues were down slightly last year, and investors are yet to see how its £2.2bn purchase of William Hill will drive future growth.
Despite this, it remains a very profitable business, with revenues of £1.8bn and historically strong profit margins. Following its recent falls, I think this share could go on to achieve a strong recovery, so I plan for it to be my ‘spare’ for 2023.
If it doesn’t work out, we can always part ways, and I can be sure there won’t be a Netflix series or tell-all book if we do.
