There’s an old saying in the investment world that “an investment portfolio is like a bar of soap, the more you handle it, the smaller it gets.” Often, the best course of action when investing for the long term is simply to do nothing. With that in mind, here’s a look at three stocks in my portfolio that I don’t plan to sell this year.
Royal Dutch Shell
Shell (LSE: RDSB) is a great example of a stock in which investors would have been better off not checking the share price in recent years and instead, just pocketing and reinvesting the sizeable dividends that the oil giant has paid out.
This time last year, with the oil price hovering around the $30 mark, Shell’s share price had fallen to an incredibly low 1,300p, a near 50% drop in just 18 months. Financial news headlines at the time were full of ‘doomsday’ scenarios for the oil sector and there’s no doubt that many investors panicked and sold out of the stock.
Fast-forward to today and not only is the oil price showing signs of life, but shares in Shell have bounced by 80% to now trade at 2,350p. By simply doing nothing while the share price was falling, investors would have pocketed a huge dividend that could have been reinvested back into the market, taking advantage of lower prices.
I didn’t sell Shell when the share price was plummeting over the last 18 months, and with the company remaining committed to the dividend, I have no intention of selling the oil giant in 2017 either.
Another stock I don’t plan to sell this year is Diageo (LSE: DGE). I love the fact that consumers buy Diageo’s brands such as Johnnie Walker and Smirnoff during both the good times and the bad, and for this reason, I plan to take a leaf out of Warren Buffett’s book and keep Diageo in my portfolio “forever”.
Another attraction of Diageo is the company’s significant emerging markets exposure, and I believe that the growing incomes and aspirational nature of consumers in these regions will drive revenue growth over the long term.
Diageo pays a nice little dividend of just under 3% at the current share price, and the dividend has grown at an annualised clip of 8% over the last five years. I reckon the ‘sin’ stock has fantastic potential for both long-term capital and dividend growth and as such, I’ll be holding Diageo for a while yet.
Lastly, at the smaller end of the scale in my portfolio is £800m market cap Aldermore Group (LSE: ALD).
The challenger bank is another example of a stock that has seen its share price fluctuate wildly in the last 12 months, being beaten down disproportionately in the Brexit panic to the 100p level. However I didn’t sell my holding during the panic, and that’s now looking like a wise move as the share price has since recovered to 235p.
With the stock trading on a forward P/E ratio of just nine, I believe there’s further room to run for both Aldermore and many of the other challenger banks and as such I don’t plan to sell my holding any time soon.
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Edward Sheldon owns shares in Royal Dutch Shell B, Diageo and Aldermore Group. The Motley Fool UK has recommended Diageo and Royal Dutch Shell B. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.