It shouldn’t be news to you by now that investing is not typically a method that can be used to become a millionaire overnight. That said, when you commit to holding your investments for at least five years, by selecting good quality companies that have growth potential, it means that the path to generating wealth over time becomes more simple than you can imagine.
With that in mind, here are two FTSE 100 stocks that meet the criteria of being quality companies with great long-term growth prospects that you should consider buying and holding for the long term.
The British-Dutch transnational consumer goods company Unilever (LSE: ULVR) owns over 400 brands and boasts that you’ll find one of at least one of its brands in 98% of households in the UK! The familiar household names such as Lipton, Ben & Jerry’s, PG Tips and Pot Noodle and many more all come under the reach of Unilever.
In fact, the company now boasts a market cap of around £118 billion, and despite a falter in the share price over the last year, the company has even averaged an increase of just over 10% in its share price over the last five years.
Growth prospects look strong thanks to a considerable exposure to emerging markets such as Brazil, India and China where the incomes of many consumers are growing each year. This should in turn fuel demand for many of the products supplied by Unilever’s brands leading to further share price growth. Not to mention the proven ability of the stock to perform well even during times of financial crisis.
This, combined with the fact that the company’s dividend to investors has grown at an annual rate of 8% presents an attractive stock which every investor would do well to consider buying right now and holding for the long term.
Relx (LSE: REL) is a global provider of information and analytics for professional and business customers across industries. Its databases and analytical software – which are used in the scientific, legal, business and healthcare fields – are vital for customers as well as being increasingly in demand thanks to the ever-expanding nature of information.
Shareholders have enjoyed an annualised return of 15% over the last five years, and whilst past performance is by no means an indicator of future returns, Relx remains in a strong position with regards to its growth prospects with the company forecasting further growth of 10% this year.
On top of this, the company’s impressive revenue, cash flow, and earnings growth have brought about an almost 70% increase in dividend payments over the past five years.
Whilst the price of the stock looks expensive with a price-to-earnings ratio of 28.09 at the time of writing, the company’s provision of unique, yet vital, services means that this is a stock with the potential to provide double-digit returns for investors over the coming years, adding to around a 95% growth in share price from five years ago.
All things considered, I believe that an investment in these two FTSE 100 stocks should be capable of delivering fantastic long-term results over the next few decades.
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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended RELX. 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.