The Motley Fool

10 cheap UK shares I’d buy in 2021 and hold until 2030

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

UK investor holding smartphone and monitoring shares
Image source: Getty Images

One way of unearthing cheap UK shares is to examine the dividend. A generous yield could be flagging a company with a modest valuation.

Another useful step to take when researching shares is to try to figure out whether shareholder dividend payments are sustainable in the coming years.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Of course, looking ahead isn’t easy. But I reckon it’s important to try because we invest ‘ahead’, so to speak. And one of the things I like to see is a multi-year record of consistent cash inflow.

Where I’m finding cheap UK shares

The past is no reliable guide to the future but I think a solid trading record demonstrating the cash-generating qualities of a business is a good start. And we can find many solid, cash-producing businesses in those sectors known for their defensive nature.

In other words, sectors that tend to be less vulnerable to cyclical ups and downs. I’m thinking of industries such as healthcare, branded fast-moving consumer goods, utilities, energy, IT, technology, food supply and others.

Meanwhile, there’s been something of a dash to cyclical recovery stocks over recent months. And I reckon investors might have left behind some of the defensive stocks. Indeed, some great companies are seeing their share prices wilt a bit right now. And maybe that’s because investors can’t have their money everywhere all at once. If that’s right, perhaps they’ve rotated out of defensive names causing the weaker share prices.

So, I’m shopping for defensive shares that can be bought and held until 2030 and beyond. And I can’t ignore the biggest defensive yields on offer in that category. They’re to be found in the wider fast-moving consumer goods sector with smoking products companies British American Tobacco and Imperial Brands.

Other stocks on my radar

Both companies are yielding above 7% and they each sport an impressive record of cash inflow and shareholder payments. I think it’s clear the tobacco sector is out of favour with investors right now.

However, there’s also good value among companies dealing in less dangerous products. For example, I’m keen on Unilever’s forward-looking yield running near 3.5%. The firm is perhaps the king of fast-moving consumer goods on the London market and it usually looks expensive. So, I tend to become interested whenever there’s weakness in the share price.  

In the FTSE 250, soft drinks supplier Britvic has an interesting yield running above 3.5%. I think the stock would make an excellent long-term hold in my portfolio. Finally, I’d pursue the theme of fast-moving goods with DS Smith. The packaging company serves the supply chain of the industry and is yielding above 3.5% as I write.

In healthcare, I’d go for GlaxoSmithKline’s yield, which is just below 6%. And in energy and utilities, my picks for further research are National Grid yielding above 5%, Severn Trent above 4%, and SSE just higher than 5%. Finally, I like the look of business software provider Sage with its yield above 3%.

Dividend yield won’t tell me everything for making good long-term share picks. But, to me, this list of 10 names is a decent jumping-off point for further thorough research.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended Britvic, DS Smith, GlaxoSmithKline, Imperial Brands, Sage Group, and Unilever. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.