As a long-term investor, I’m always on the lookout for UK shares I can buy and hold for the next five years, at least. Unfortunately, this is incredibly difficult.
There’s never any guarantee a company performing well today will still be doing so five years from now. That said, I believe by focusing on defensive businesses with substantial competitive advantages and diversified operations, I can swing the odds of success in my favour.
With that in mind, here are five UK shares I’d buy today with the aim of holding until 2025.
UK shares to buy
Speciality ingredients business Tate & Lyle is one of the UK’s oldest publicly-traded companies. Its brand is recognised across the UK, and its reputation means manufacturers worldwide can trust the business to produce quality products on time.
Based on these competitive advantages and its history of dealing with change, I’d buy the stock for the long term.
That’s not to say the firm doesn’t trade without risks. Just because Tate is well-established doesn’t mean it’s competition-free. That’s a real challenge for the enterprise. The global shift towards healthier food could also impact the firm’s bottom line. These are two risks I’ll be keeping a close eye on.
Sticking with well-known, established firms, I’d also buy Royal Mail and ITV. Both of these UK shares have had to deal with some severe headwinds recently.
ITV has had to confront the rise of online streaming. Meanwhile, Royal Mail has had to face falling letter volumes. Both firms have confronted these challenges in different ways. So far, it seems as if they’ve managed to navigate them, although they remain a threat.
Still, I think these UK shares could benefit from growth tailwinds over the next few years, as the UK economy recovers from the coronavirus pandemic.
Essential service
The last two UK shares I’d buy to hold for the next five years at least are DCC and Savills.
DCC is a distribution business. It’s challenging to operate in this industry successfully because profit margins are wafer-thin. DCC has been able to succeed because it’s one of the largest. I think this competitive advantage will help the business succeed in the long term.
That said, this advantage could also become a drawback. If sales suddenly dropped, the company could see significant losses. That could put its long-term viability at risk.
Savills’ advantage is its reputation. The group is one of the world’s best-known estate agents, focusing on high-end property. Unfortunately, this means the company’s outlook is tied to that of the property market, making it a volatile investment.
Still, I think it’s highly likely people will still be buying and selling homes five years from now. That suggests Savills may be around selling these properties.
