As a general rule of thumb, we say investors should be willing and able to hold shares for at least five years. This usually allows enough time for short-term fluctuations to even out, and for underlying strengths and trends to shine through.
But when you consider investing for even longer periods, other traits start to come into play. With that in mind, here are the three shares I would buy and hold for the next five, 10 and even 30 years and beyond.
Over this relatively short term, capital growth is more important than dividends, and you can aim to take advantage of a more immediate market or technology shift. This is why for the next five years, I would buy and hold technology firm Keyword Studios.
Keyword develops tech and software predominantly for gaming, including online mega names such as Fortnite. With the upcoming implementation of 5G, online gaming is set to move even faster to mobile devices, likely vastly expanding the industry in a fairly short period of time.
By supplying multiple firms, Keyword has a hedge against any one company or game failing, but is in prime position to take advantage of the industry growth over the next five years.
As we move to longer terms, fundamental technology shifts and industry stability become more important. Though the development of renewable energy and clean fuels is an ongoing priority for the world, the chances of it entirely replacing oil in the next 10 years still seem highly unlikely to me.
This is why for the next decade, I would buy and hold Royal Dutch Shell. Shell has shown itself to be adaptable to technology shifts and is developing renewable energy sources of its own, putting it in a good position in the energy market over the next decade.
Over longer periods, dividends also begin to play a larger role. Shell currently has a dividend yield of about 6.3%, and has shown it consistently maintains dividend growth over the long term. At 6% yield, reinvested each year over the next ten years, every £1,000 investment today would be worth almost £1,800, even without capital growth
30 years +
Over the extremely long term, dividends become even more important, as do the fundamental principles behind an industry. This is why my long-term buy-and-hold stock is HSBC (LSE: HSBA).
Though financial stocks tend to be more volatile in shorter periods, over the long run these average out. While we cannot foresee the technology shifts that will transform almost every industry over the next 30 years, as long as there is capitalism, banks are here to stay.
HSBC currently offers a dividend yield of 6.7%, which has consistently grown over the last five years. This means at around 6.5%, for every £1,000 invested today, reinvesting dividends each year would mean you get about £ 6,600 in 30 years, again even before capital growth.
With its strong focus on China meanwhile, which almost all economists agree will be the key growth area over the next few decades, it is also set to see large gains from this expanding market.
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Karl has shares in Keyword Studios, Royal Dutch Shell and HSBC Holdings. The Motley Fool UK has recommended HSBC Holdings and Keywords Studios. 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.