There’s no ideal length of time that FTSE 100 investors should hold onto their stocks for before selling. However, when finding shares to buy — whether on the Footsie or any other index or stock exchange — I aim to hold them in my portfolio for at least a decade.
I believe that a long-term horizon allows time for share prices to recover from market fluctuations, which are inevitable as the economic cycle revolves. This approach also reduces the pressure on me to make frequent buy and sell decisions, thus allowing me to stay focused on the fundamentals of each stock.
With this in mind, here are two FTSE 100 shares I’d buy to hold through to the mid-2030s if I had the cash available. I think they could deliver healthy share price gains along with a growing dividend.
Should you invest £1,000 in Diageo right now?
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Barratt Redrow
High interest rates and weak economic conditions are dampening sales at Barratt Redrow (LSE:BTRW) and future periods of economic weakness are likely to do so again. But overall, this major construction firm has considerable long-term potential as Britain prepares for a fresh building boom.
Under government plans, some 1.5m new homes will be built over the next five years. This will be achieved by loosening planning rules that’ve long dogged housebuilders’ growth aspirations.
Actually hitting these targets will be a challenge for the new government. But housing supply’s becoming an increasingly urgent and politically-sensitive problem. I’m expecting ministers to throw the kitchen sink at boosting housing production to the benefit of Barratt and its peers.
This FTSE 100 company’s mega merger with Redrow puts it in pole position to capitalise on this opportunity too. It’s by far the country’s biggest homes creator, and plans to build 23,000 a year and generate £7bn of annual sales.
I think today could be a good time to buy in as well as the housing market recovery accelerates. Mortgage approvals hit two-year highs in September, according to the Bank of England. And they look set to keep rising as interest rates fall.
Sage Group
Software stocks like Sage Group (LSE:SGE) can experience volatility during economic downturns. In this case, profits can stumble when businesses cut spending on accounting and business management software.
But the outlook for the next decade’s extremely bright, in my opinion. And it’s not just because companies across the globe are increasingly digitalising their operations.
I’m chiefly optimistic because of the progress Sage is making in the field of artificial intelligence (AI). The business has predicted that machine thinking will “change the nature” of accounting, and has invested heavily in the field in recent years.
Earlier this year it rolled out its first generative-AI-based products, Sage Network Inbox and Sage Copilot. With additional AI integrations coming down the line, the sky could be the limit over the next decade.
I certainly think Sage shares are a more attractive play on AI than expensive US tech stocks. The FTSE firm trades on a forward price-to-earnings (P/E) ratio of 27.8 times.
Chipmaker Nvidia, by comparison, trades on a multiple closer to 50 times earnings.
