Helal Miah, Investment Research Analyst explores his top five shares that give him confidence over a medium to longer period of time.
Top 5 buy and hold shares
There are many types of investors and investment strategies, but as I’ve gotten older and more experienced, I’ve learned that I like shares that you simply don’t have to worry about on a day-to-day basis. These are shares that you feel confident about that over a medium to longer period of time would likely generate returns through a combination of capital growth and income. Naturally these are going to be companies at the larger end of the market cap spectrum or ones that tend to be defensive to some degree.
GlaxoSmithKline – this is the one of the first companies in this category that comes to mind. Recent performance has not been great owing in large part to generic competition and the pandemic hitting sales of prescription drugs as people avoided visiting the doctors if they could. The share price over the last decade or so has just moved sideways, however this overlooks the solid dividends that the company has been paying over years, averaging at around a 5% yield, the compounding effect would have made some nice returns. I feel that it may continue to trade within the range we have seen lately but being at the bottom of that range now and an indicative yield of around 6%, this would make it an attractive share to buy and not worry about in a portfolio.
AstraZeneca – Much like GSK, AstraZeneca suffered from heavy generic competition, but a new CEO some years ago ramped up spending in R&D and in recent years we have begun to see those fruits as newer drugs account for as much as half of all revenues. It must be commended for its quick development of a vaccine in partnership with the University of Oxford, it should take just as much admiration for the fact that it does not seek to profit from the vaccine. The shares have quadrupled since the lows of the financial crisis and in that time it paid out an attractive dividend. The yield at this moment is historically low at under 3%, but once the pandemic effects fade investors can be comfortable in looking forward to long-term growth again given a promising drugs pipeline.
Unilever – the Anglo Dutch foods and household goods company is the epitome of a solid defensive company. As we have seen with the pandemic, people still need to eat and they spent more home cleaning products, but fewer people going physically into the office resulted in lower personal care spending, but that’s the great thing about this company – is has so many products and brands that are sold all across the world. The share price during the pandemic has failed to match the highs of 2019, but its growth over the longer term has been fantastic, doubling over the last decade. As more middle-class consumers emerging in the developing countries and the company’s global foothold will ensure that takes part in this growth. Its dividend yield is not great at around 3.5%, but its risk versus return characteristics are very attractive over the longer term.
Reckitt Benckiser – this would fall in very much the same category as Unilever, its smaller but nonetheless has a wide portfolio of products that are sold globally with the emerging markets becoming ever more important as a source of growth. Its share price has steady grown nearly seven-fold over the last two decades, but the last couple of years it has stumbled partly owing to past its ownership of Indivior which has been caught up in legal cases related to opioid addiction as well as an infant milk scandal in China. However, these represent a small part of its overall product portfolio. Again, the yield is modest at just around 2.5%, this is because it remains focussed investing for growth.
National Grid – Utilities are traditionally seen as a safe and steady pair of hands, however judging by where Centrica, BT and others are today compared to their peak you wouldn’t think so. Thankfully investors can still rely upon National Grid who maintain and operate the country’s electricity and gas infrastructure. The shares have more than doubled over the last decade, thanks in part to its US exposure which has been growing and now generates the bulk of its revenues. Further steady revenue growth is forecast and a yield that has averaged around 5% makes this another attractive Buy and Hold play.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.