There are more than 2,000 people who have become millionaires through a Stocks and Shares ISA. I am using their success to guide my thoughts as I find a tax-free haven for my investments.

In looking at the foundations of millionaires’ portfolios, analysis by AJ Bell shows 10 shares are the most popular.

Shell

It isn’t part of my portfolio, yet, but there are clear signs that Shell could be a great long-term investment. Earnings are strong and analysts predict dividends will grow. There is risk because of its exposure to fossil fuels, but it is investing in renewables.

Lloyds Banking Group

Amid rough times for global banks, Lloyds Banking Group shares look good value to me. ISA millionaires may have taken some short-term losses, but I think now is the time to buy. Last year, net income was up 14% and pre-tax profits stable despite a difficult market. The dividend also jumped 20%.

BP

I think BP shares provide a great lesson in long-term investment strategies. While the short-term share price graph looks volatile, the long-term trend shows growth. Like Shell, fossil fuels are a risk, but it is making big in-roads into renewables. A 4% dividend yield helps investors.

Scottish Mortgage Investment Trust

I own shares in Scottish Mortgage Investment Trust, so I know the benefits of its long-term investment strategy. I also know the pain of the recent share price fall, which has plummeted from £15 to less than £7. However, as a long-term investor, the value of my shares is still up 50% in five years.

Aviva

For investors, the best thing about Aviva shares is the dividend yield, currently more than 7%. Other than that, the share price is where it was decades ago. Whether it’s a favourite of ISA millionaires or not, this isn’t one for me.

GSK

GSK seems to have a healthy future with its renewed focus on pharmaceuticals, while Haleon takes on consumer healthcare. City analysts predict dividend returns of more than 4% for the next two years and I expect the share price to rise, so I am holding onto my stake.

Rio Tinto

I sold my Rio Tinto investment at just the right time when I questioned whether it could continue to return long-term share growth. Since then, the shares are down substantially. A recent cyber-attack is also a concern.

HSBC

It may be a good time to buy stalwarts such as HSBC. Their share price has suffered from others’ misfortune, despite adjusted profits and revenues being up last year.

Diageo

If it’s good enough for Warren Buffett, it’s good enough for me. Diageo is one of my priority buys before the ISA deadline. The shares are up 50% in five years and there is a dependable, if modest dividend.

National Grid

National Grid has been a solid performer in my portfolio for years and its latest results show that is likely to continue. With operating profit up 44% and a commitment to increasing the dividend so it delivers a steady yield of around 5%, it’s my long-term star performer. The key risk is whether it will be nationalised under a new government.

The post These 10 investments turned Stocks and Shares ISA investors into millionaires, so should I buy them all? appeared first on The Motley Fool UK.

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HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. John Maslen has positions in Lloyds Banking Group, Scottish Mortgage Investment Trust, GSK and National Grid. The Motley Fool UK has recommended Diageo Plc, GSK, HSBC Holdings, Haleon Plc, 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.

The figures behind the success of Warren Buffett’s investment strategy at Berkshire Hathaway are staggering.

Since 1965, it has delivered annual gains averaging nearly 20%. Investment returns have beaten the S&P 500 for 70% of the time. Overall gains on investments are 3,787,464%. The fund has returned annual growth in 47 of its 58 years – an 81% success rate.

So what is the secret of Buffett’s success? Luckily, he is more than willing to share the ‘secret sauce’ of Berkshire Hathaway’s amazing returns.

Firstly, it is all about perspective. Buffett says the goal is to “make meaningful investments in businesses with both long-lasting favourable economic characteristics and trustworthy managers”.

When purchasing stocks with long-term business partner Charlie Munger, the focus is long-term business performance.

“That point is crucial. Charlie and I are not stock-pickers; we are business-pickers.”

Warren Buffett

He argues that success has been built on about a dozen truly good decisions and the advantage of long-term investment.

A good investment decision is rewarded with strong, regular dividends and a rising share price as the business grows.

The ‘secret sauce’ of investing

For example, Berkshire Hathaway’s $1.3bn investment in Coca-Cola generated dividends of $75m in 1994. By 2022, annual dividends rose to $704m. Over the same period, the value of Coca-Cola shares rose 1,900% to $25bn.

It was a similar story with American Express. Annual dividends from Berkshire’s $1.3bn share purchase rose 740% between 1995 and 2022, from $41m to $302m. The value of the investment also grew 1,700% to $22bn.

These stratospheric sums are beyond the wildest dreams of individual investors, but the strategy applies whether we have £100 or £1bn to invest.

The secret sauce lies in finding a strong business that is destined for growth.

Warren Buffett says the lesson for investors is that “the weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders”.

Building wealth through patient investing

You can see the power of long-term investment in companies such as Diageo (LSE:DGE), one of Berkshire Hathaway’s investments. Over the past 40 years, the share price has risen nearly 6,600%. It has also generated healthy dividend yields averaging around 3%.

Currently, most analysts perceive Diageo as a ‘buy’ because of strong recent performance.

For the half-year to the end of December 2022, net sales were up more than 18% to £9.4bn. Operating profit grew 15.2% to £3.2bn. The interim dividend also increased by 5%.

Without a long-term view, there is a risk of an investor missing future growth. For example, between 2002 and 2003, the Diageo share price fell 30% from £9 to £6. Had I owned shares at the time, it may have prompted me to rush to sell and take a loss. But since then, the share price has soared 500%.

This is where the value of long-term investment lies.

In his letter to investors, Warren Buffett provides a list of insightful quotes from Munger that can guide investing.

Perhaps the most valuable is what inspires long-term investment.

“The world is full of foolish gamblers, and they will not do as well as the patient investor.”

Charlie Munger

The post Revealed: Warren Buffett’s investing ‘secret sauce’ for finding value stocks appeared first on The Motley Fool UK.

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American Express is an advertising partner of The Ascent, a Motley Fool company. John Maslen has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo 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.

Fernando Alonso’s podium in the recent Bahrain Formula One race has given Aston Martin (LSE: AML) shares a boost.

After being fastest in practice, Alonso overtook seven-time world champion Lewis Hamilton during the race.

Pundits are even claiming Aston Martin could challenge championship contenders Red Bull and Ferrari this season.

This recent success is powering the brand’s share price. It has nearly doubled so far this year and experts predict the podium could have added $400m to the company’s value. The share price has leapt up to 30% compared to before the race weekend.

If there is more to come, could this be a good season for Aston Martin and its shareholders?

Aston Martin – beyond Bond

It is certainly an exciting new chapter for the Aston Martin brand that could win a new generation of fans. To date, the 110-year-old carmaker has been synonymous with James Bond, particularly its historic models.

But involvement in F1 brings it bang up to date. More than 60% of customers are new to the brand, partially through its racing strategy. Its F1 fanbase totals 150m people. Importantly, test drives are up more than 60% in key markets.

Last year, Aston Martin’s revenues were up 26% and the average selling price exceeded £200,000. Many of its models are sold out for 2023.

After around 6,400 sales in 2022, it is targeting 7,000 this year and 10,000 in the longer term.

This all seems like a winning proposition, which is vital to securing ongoing investment for model updates, marketing, and new launches.

The price of success

But winning costs money. So does keeping up with the pack in a fast-changing automotive market.

Revenues of £1.4bn in 2022 were eaten up by production costs, investment, overheads, and interest. This left the business with a full-year loss of £527m, nearly three times higher than 2021.

Electrification will also prove a challenge, as Aston Martin guides petrol-heads to a new high-performance portfolio as the world switches vehicle fuels.

Its first plug-in hybrid, the Valhalla, starts deliveries in 2024 and the first fully electric model should arrive in 2025.

With many countries looking to ban the sale of new fossil-fuelled powered cars by 2035, the race is on to remain relevant and exciting.

Age and experience

There is also the unpredictable nature of F1 to consider. Leaders can be turned into laggards in a few races, such is the frantic pace of development during the season. Furthermore, star driver Fernando Alonso is the oldest on the grid at 41. This is beyond retirement age in such a demanding sport.

His huge experience is a key factor in the team’s success. He is a two-time world champion from his time racing with Renault. He also won the Le Mans 24-hour Race twice. He has hundreds of podiums, pole positions and fastest laps to his name.

These are big shoes to fill for teammate Lance Stroll, the son of the F1 team owner, should the time come.

Aston Martin is on an exciting and transformational journey. But as a long-term investor, and given the risks involved, I plan to be a spectator and invest elsewhere. I will still follow the F1 team though. And if my portfolio delivers in the long term, hopefully I can invest in one of its amazing road cars in the future.

The post After Fernando Alonso’s brilliant F1 podium, should I race to buy Aston Martin shares? appeared first on The Motley Fool UK.

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John Maslen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Owning BP (LSE: BP.) shares may have some people rushing to glue themselves to the road in protest. However, I believe it offers good news for the planet as well as investors.

It’s an investment for the long term in every sense, which makes it the best buy for my portfolio March.

BP is transitioning into an integrated energy company to help power the zero-emission revolution worldwide.

In the medium term, there are 1.4 billion cars globally that need to fill up with dinosaur juice. In time, BP’s size and scale mean its resources can deliver the global change environmental campaigners want.

Powering cleaner transport

For example, BP recently announced plans to invest $1bn by 2030 into electric vehicle (EV) charge points across the US.

It is also partnering with global rental giant Hertz to roll out fast-charging at its hire depots.

Investment in charging hubs will include large-scale development for rideshare and taxi drivers.

EV charging is one of BP’s “engines of strategic growth” in which the company plans to significantly grow investment by 2030.

BP has 22,000 EV charging points worldwide. It is targeting 100,000 globally by 2030. 

Its BP Pulse brand is creating the first charging corridor for trucks in Europe as demand grows. Experts say that by 2030 there could be 270,000 electric lorries on the road. They would need 140,000 public electric charging points.

In the UK, BP Pulse has a network of 9,000 public chargers and has installed more than 50,000 home chargers.

A plan for the future

For me, this is the best of both worlds. It is powering the world of today and tomorrow. I understand that change takes time, especially for a company with $250bn in revenues and a 4% dividend yield.

I also recognise that only a few companies can really drive change.

Some call BP a dinosaur because of its involvement in fossil fuels. There is the risk of demonstrations, legislative restrictions, and the continuing spectre of potential oil spills.

But in my view, despite the risks, BP is a company that is driving future change. I intend to invest so it can power my portfolio too.

All aboard the bonus bus

My bonus stock is global transport provider National Express Group.

Full-year results for 2022 are due on March 2. I don’t think the current share price reflects its potential.

It has plunged nearly 50% in the past year. There may be a risk of further falls; its historic lows are 40% below its current share price.

However, there are lots of signs of growth and executives want to reinstate dividends for the 2022 results. Previous performance is no guarantee, but anything similar would give a yield of 4-8%. That’s a healthy return.

Given its potential for growth and improving operating margins, I am staying on this journey for the long haul.

The post BP shares are my best buy for March along with one dirt-cheap bonus stock appeared first on The Motley Fool UK.

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John Maslen has positions in National Express Group. The Motley Fool UK has no position in any of the shares mentioned. 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.

There is a key rule that I always apply to my Stocks and Shares ISA. Buy for growth and invest for the long term.

This was behind a significant addition to my investments recently.

I made an initial investment in Vodafone (LSE: VOD). I was attracted by its historic 8% dividend yield and also because the share price was hovering around £1.

The shares are up 10% since I bought, but I expect this to be a strong long-term investment. Also, I am not alone in thinking there is growth potential in Vodafone.

Telecoms giant Liberty Global has purchased a significant stake because it feels the business is undervalued.

This isn’t a small investment. It bought 1.33 billion shares. Chief executive Mike Fries said the investment was made because the share price “does not reflect the underlying long-term value of their operating businesses”.

This vote of confidence suggests to me that Vodafone’s years-long share price fall has reached its lowest point. The share price is now just 30% of its value in 2014.

International exposure

The cause of investor concerns is the impact of fierce competition in its European markets. Clearly, this could risk further decline. But I believe this business has the funds and the focus to deliver long-term growth.

Firstly, Vodafone is a well-known brand serving more than 30 international markets. Secondly, its substantial net debt reflects the sheer size of the business. It also indicates that it has the power and scale to respond to competitive threats.

After all, it still has more than 300m mobile customers and 27m fixed-broadband customers. 

Furthermore, its Q3 2022 trading update was encouraging. Despite falls in some markets, it is adding hundreds of thousands of users in high-growth markets, such as South Africa.

In South Africa, Vodafone added 132,000 mobile contract customers during Q3 2022. It also has a new ‘super-app’, called VodaPay, that has attracted 2.7 million users. It reports higher data usage and good demand for financial services.

In total, across Africa, Vodafone has 185 million mobile customers and 90 million data users.

In Turkey, another growth market, Vodafone added 439,000 mobile contract customers during Q3 2022.

That’s not forgetting the UK, which accounts for 14% of revenues, where healthy growth continued.

There are some market challenges, mainly Germany, Italy and Spain. But overall revenues remain broadly stable. Furthermore, the consensus of analysts is for a dividend of around 8p a share for the next two years. This would represent a yield of nearly 9% on the price I paid for the shares.

Overall, I tend to agree with big investors such as Liberty Global. Vodafone faces challenging times. But I think the stock is undervalued considering its potential for growth. It is set to be a key part of my Stocks and Shares ISA for years to come.

The post I bought this bargain share for my Stocks and Shares ISA as I build a second income appeared first on The Motley Fool UK.

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John Maslen has positions in Vodafone. The Motley Fool UK has recommended Vodafone Group Public. 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.

Warren Buffett, the world’s most successful investor, believes passive income is a key to wealth. He says: “If you don’t find a way to make money while you sleep, you will work until you die.”

He means that if I make the right investment, my money never sleeps. I can benefit from regular dividends that are then reinvested to build my income in the long term.

However, to succeed I need solid foundations, in the form of shares that are stable and secure. There is no point chasing a 10% dividend yield only to find that the value of my shares has dropped 50% over the same period.

So, when choosing two UK shares for a passive income, it is important to consider my options carefully.

A thirst for income

That is why my first key investment is Britvic (LSE: BVIC). The global soft drinks giant operates in a sector we can all raise a glass to. It sells leading brands such as Pepsi Max, J2O, Robinsons and Gatorade, which generated more than £1.6bn in its key markets last year. It also delivered a healthy dividend yield of 4% to shareholders.

After a good Christmas, its executives have a focus on cost control that I feel will continue to reward investors, despite the shaky global economy. I am also confident that returns will beat the income that bank investment accounts have to offer following recent rises in interest rates.

Furthermore, the share price has proved pretty stable through turbulent times, which means my initial investment should retain its value.

This combination of factors are the essential ingredients of building a passive income, so I expect my investment in Britvic to increase as the years progress.

Just like Britvic’s drinks, I know what I am getting. Which, in this case, is a good investment that should generate strong long-term returns.

A call for improved performance

My second investment is one where timing is everything. Vodafone (LSE: VOD) has seen a drop in its share price in recent years.

Investors are worried about falling revenue in mainland Europe. Even chief executive Margherita Della Valle acknowledges there are areas where the business ‘can do better’.

She has several initiatives underway to deliver hundreds of millions of pounds worth of cost savings in the next three years and manage its sizeable debts.

The share price reflects the size of the challenges ahead in steering such a massive global company, with a fall of 59% over the past five years.

That doesn’t seem like the stable platform on which passive income is built. But market jitters have made it good value, I believe. Furthermore, an 8% dividend yield will help to offset any further falls in value, although I think it is already at bargain basement levels.

There is a significant potential upside to the telecommunications giant at its current price. As a long-term investor, I think it has all the ingredients to deliver generous returns from both share growth and high-yield dividends in future.

The post I’ve invested in these two UK shares for their passive income promise appeared first on The Motley Fool UK.

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John Maslen has positions in Britvic and Vodafone. The Motley Fool UK has recommended Britvic Plc and Vodafone Group Public. 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.

Will it be worth the caffeine withdrawal to fund a promising return? I think so, and here’s why.

Invest in the investor

My plan is to build an investment war chest by shunning coffee shops and putting the funds into shares instead. It could generate £2,000 a year (I typically buy for two people). The savings pot will be going towards shares in Schroders (LSE: SDR).

By funding my first year in advance, I can invest in around 400 shares, based on the current price of around £4.80.

There are two reasons why I have picked Schroders. Firstly, there is potential for the share price to reach £6 (a 25% increase), as it has done three times since 2015. The share price is up 8% year to date.

Secondly, there is a strong dividend yield of more than 4%. This could generate increasingly valuable returns the longer I maintain my home brew commitment.

Schroders is a UK investment management company with more than £700bn of assets under management, and a history of outperforming market benchmarks. In 2021, it generated record pre-tax profits of £836m from revenue of nearly £3bn.

Investing for the future

In the company’s 2021 annual report, group chief executive Peter Harrison referred to a “virtuous circle of investing for growth”.

That includes a focus on sustainability. Schroders is a founding member of the Net Zero Asset Manager (NZAM) initiative. It supports a decades-long plan to prioritise green investments and help businesses on the path to net zero.

Harrison said: “We must do this for both our business and our investments. The next two decades will be crucial for climate change.

“The successes of today enable the investments required to create the capabilities for the long term. But those investments will also shape our future 20 years down the line.”

This long-term thinking gives me confidence in my plan to make Schroders a multi-year investment. This way, I can benefit from the compound growth delivered by reinvesting dividends.

A long-term commitment

If I maintain my ‘Costa-living’ commitment and shun Starbucks, then over five years I will have invested £10,000 in Schroders. Reinvesting dividends could return a further £1,300 if the dividend yield averages 4.5%, based on today’s share price.

If I extend the commitment to 10 years, my total investment would grow to more than £25,000, including nearly £6,000 of potential dividend returns.

Not bad for the price of a coffee.

There is risk involved, not least focusing so much on a single shareholding. However, this is just the part of my portfolio funded solely from a lifestyle change.

That means I have a wide range of other assets to cushion me from any financial blows. These include a falling share price (which has dropped as low as £3.78 over the past five years) and any reduction in dividend payments.

However, I believe there is growth potential ahead. As an investment strategy, I expect it to mocha good return.

The post This life hack could buy 417 shares of a bargain FTSE 100 stock with 25% growth potential appeared first on The Motley Fool UK.

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John Maslen has positions in Schroders. The Motley Fool UK has recommended Schroders 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.

Once a month is enough to carry out a review. It stops me obsessing over minor price changes each day. Instead, I concentrate on long-term trends that are the key to a great investment strategy.

Here are my top picks for February.

Building growth

A fluctuating share price has generated some startling dividend yield figures at Persimmon (LSE: PSN), most recently more than 16%, but I am taking a realistic approach in choosing the housebuilder as an investment.

A trading update on 2022 performance said new home completions were up 5% year on year, and average selling price increased 5%.

Group Chief Executive David Finch said that the year had seen a strong performance, despite “headwinds”. These include supply constraints and a more challenging sales environment, with rising interest, mortgage rates, inflation and weaker consumer confidence.

These are short-term issues that will weigh on forward sales, but he is confident that long-term demand for new homes remains strong.

I tend to agree, not least because there is a national housing stock shortage of more than one million homes. More homes are needed, and I think this will continue to drive demand in the long term.

Furthermore, I think worries about future economic challenges are already reflected in the share price. Currently, it sits at around £14 — far below the lows reached during the pandemic.

There is a risk the share price could fall further as the housing market cools during 2023. Also, in the global economic crisis back in 2008, dividend yields collapsed to almost nothing.

However, I believe there are significant long-term gains to be had in both the share price and yield. If dividend returns are around 4-8%, based on the current share price, then I will be happy.

Digging for diamonds

Back in October last year, The Motley Fool’s Royston Wild picked Anglo American (LSE: AAL) shares as a great value stock that he was interested in after their price slumped.

He chose well, as an investment at the time would have leapt 30% by now. I think there is still more good news to come, particularly in terms of its strong dividend yield of more than 5%.

There is a risk, because pre-Covid dividend returns were much lower. If I look at the 2018 yield as a share of today’s share price, it would be 2%.

However, I think there are some key factors that will drive its growth, with a wide-ranging mining portfolio covering in-demand commodities, including platinum and diamonds (Anglo American owns 85% of De Beers Group, the global diamond company). It is also involved in crop nutrients.

A key to growth will be the Quellaveco copper mine in Peru, one of the largest undeveloped copper deposits in the world. As production ramps up, it is expected to increase global production by 10%. This in turn should drive profits and future dividends.

The post My February stock picks are dividend yield heroes appeared first on The Motley Fool UK.

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John Maslen has positions in Persimmon. The Motley Fool UK has no position in any of the shares mentioned. 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.

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.

The post Why Prince Harry has inspired which UK shares I will buy in 2023 appeared first on The Motley Fool UK.

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John Maslen has positions in Unilever Plc. The Motley Fool UK has recommended GSK and Unilever 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.

As a cautious investor, trust and knowledge are key when building my portfolio. And there is one UK share I see in particular as a foundation of growth this year and into the future – National Grid (LSE:NG).

There are two reasons for this.

Dependable dividends

Not all dividends are made equal, and when companies hand out a share of their profits each year, some generate greater income for investors than others.

National Grid has been a star performer in my portfolio for years when it comes to dividends, with a yield of around 5%. This means that despite National Grid currently accounting for 9% of my total investment portfolio by value, last year it represented 14% of the dividend income generated from all my shareholdings.

There is no guarantee that future dividends will reflect past performance. But the half-year results National Grid presented in November 2022 were highly encouraging, with operating profit up 44%, earnings per share up 42% and interim dividend growth of 3.7%.

Furthermore, the total value of dividend payments has been rising steadily for years, despite the disruption of the pandemic.

Finally, there is a clear commitment from chief executive John Pettigrew to aim to grow dividend per share in line with CPIH, the leading measure of inflation.

Put all these together and it gives me confidence that National Grid will remain a strong dividend performer in my portfolio for years.

Stable share performance

Investing in the current climate can be unpredictable, as once-promising businesses suddenly collapse in value (I am looking at you, Cazoo). But for me, National Grid represents a relative oasis of calm.

Every share price can show volatility in the short term, but over the long term National Grid tends to hover between 900p and 1,100p.

Investing at the right time remains important. But there is always the security of potentially strong dividend income to offset any reduction in share value, especially when planning to hold shares for a long period of time.

National Grid’s strength is its essential role, now and in the future, powering economies through energy infrastructure, distribution and transmission. It is a leading investor in the delivery of net zero, the transitioning to a fossil-free future in its UK and US markets, with major projects including significant investments in offshore wind that will power millions of homes.

My long-term partner

For my investment portfolio, I see National Grid as a long-term partner. Even in a post fossil-fuel world, with its investment in wind and solar, as long as the wind blows and the sun shines, National Grid should continue to generate strong revenues, leading to robust dividend and share price performance. If the encouraging signs remain, I expect its share of my portfolio to increase to make the most of its potential.

The post Why this UK share could power my portfolio growth for years appeared first on The Motley Fool UK.

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John Maslen has positions in National Grid. The Motley Fool UK has no position in any of the shares mentioned. 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.