2 cheap shares I’d buy and hold for decades!

With pressures such as inflation continuing to impact the market, this Fool explores why he’d be keen to snap up these two cheap shares.

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In the past few years market volatility has become a common theme. And with many stocks experiencing a decline in price, I think now’s the perfect time to shop around for some bargains. With that in mind, here are two cheap shares I’d buy today and hold for the times ahead.


At just 43p, Lloyds (LSE: LLOY) shares are at the top of my list. I already own the stock, but I’d consider buying some more at its current price.

Before we explore why I’m bullish on the stock, let’s start by getting my concerns out of the way. The most obvious is its performance in recent times. The last five years have seen the stock fall 30%. In the last 12 months, it’s down nearly 10%.

A mix of factors have combined to produce this dire performance, with it recently being inflationary pressures. This has had a major impact on Lloyds’ operations, including leading to higher impairment charges, as seen in its latest results. In the foreseeable future, I expect inflation-related concerns to continue weighing on the stock.

However, I’m not worried about that. And I’m more concerned about what the price will be in 10+ years’ time.

The biggest attraction for Lloyds is the passive income opportunity it presents. With a dividend yield of nearly 6%, covered three times by earnings, this offers a stable source of income that should tide me over should the share price continue to lag.

With a forecast price-to-earnings (P/E) ratio of just six, Lloyds fundamentally looks cheap. For comparison, the FTSE 100 average is more than double that.

It may have been through a tough period in the past few years, but I’m fully expecting the bank to come out the other side stronger.

British American Tobacco

I’m also keeping a keen eye on British American Tobacco (LSE: BATS).

I’ve been watching the stock in the last few months or so, and like Lloyds, despite a poor performance of late, I think there’s plenty to like about it.

Firstly, it offers one of the highest yields in the Footsie, clocking in at 8.5%. What’s more, the business has taken steps to boost its dividend in recent times, including a 6% raise last year.

It also looks cheap, with a P/E ratio just shy of seven.

The biggest risk to the company is the falling popularity of smoking. Nowadays, investors focused on ESG (environmental, social, and governance) factors won’t even touch stocks of this kind.

However, the tobacco industry is still huge. Last year, the firm sold over 600bn cigarettes.

With future-proofing in mind, it’s also moved its attention to non-cigarette income streams, including modern oral products via its brand Velo. For the first half of the year, its New Categories revenue rose by over 25%. In the next few years, the business aims to generate over £5bn of revenue from these products.

What I’d do

While both stocks have faced pressures, I think at their current prices now could be a good time to buy. If I had the cash, I’d look to pick them up and hold them for the long run.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Charlie Keough has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended British American Tobacco P.l.c. and Lloyds Banking Group Plc. 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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