A brilliantly reliable FTSE 100 share I plan to never sell!

This FTSE-quoted share has raised dividends for more than 30 years on the spin! Here’s why I plan to hold it in my portfolio for the rest of my life.

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The FTSE 100 is a great place to go share shopping, as history has shown us. The UK’s premier stock index has delivered an average yearly return of 7.5% since it began trading in the 1980s.

At times, share investing can deliver its fair share of downs as well as ups. But with the right strategy, it can also be a highly lucrative way to make money over the long term.

I’m aiming to build wealth with a balanced portfolio of dependable/’boring’ stocks and riskier, more cyclical ones than can deliver stunning growth during the good times.

Support services business Bunzl (LSE:BNZL) is one of my favourite boring FTSE 100 shares. And so it’s one of the biggest holdings in my portfolio today. Let me tell you why I plan to hold this company ‘forever.’

Strong profit growth

At first glance, Bunzl didn’t set the place on fire with its full-year trading update today (26 February). In fact, at £32.12p per share, the company dropped 3% in value as it announced a fall in annual sales.

Revenues at the business dropped 2% during 2023, to £11.8bn.

But there was nothing here to spook me as a shareholder. This sales reversal was thanks in some part to normalising prices, as cost pressures waned and Bunzl dialled back on price hikes.

In fact, the London business put in another stellar performance (despite falling volumes in some territories). Pre-tax profit soared 10.1% year on year to £698.6m, or 4.4% on an adjusted basis to £853.7m.

Operating margins increased to 8% from 7.4% in 2022, which in turn thrust operating profit to £789.1m, up 12.5% year on year.

Bunzl also continued to generate mountains of cash, with its cash conversion for the year coming out at 96%. As a consequence, it hiked the annual dividend for the 31st straight year.

“Steady eddy”

Analyst Matt Britzman of Hargreaves Lansdown described Bunzl as a “steady eddy” following Monday’s solid update.

He notes that Bunzl just “gets on with its business of selling essential goods and finding margin accretive acquisitions“. And, critically, Britzman comments that the firm “is very good at it.”

The good news is that the business is showing no sign of slowing down on its brilliant, acquisition-based growth strategy. It made 19 bolt-on buys last year, and today announced one more acquisition in the UK and a further one in Finland.

The company now operates in 33 territories following that latter acquisition. A strong balance sheet gives it the means to continue making profits-boosting takeovers.

A top buy

It’s perhaps no surprise to see Bunzl’s share price fall in Monday trading. Given the strength of recent months, some weakness can be expected as traders take profits.

I believe the company remains a top buy today. This is despite its forward price-to-earnings (P/E) ratio of 17.5 times. A premium rating like this could lead to fresh share price falls if trading suddenly worsens.

But I think Bunzl shares are worthy of this lofty valuation. Revenues are now 28% ahead of pre-pandemic levels. And I fully expect them to continue growing strongly as the acquisitions continue to stack up.

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.

Royston Wild has positions in Bunzl Plc. The Motley Fool UK has recommended Bunzl Plc and Hargreaves Lansdown 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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