It’s easy to think you need to make regular trades to maximise your investment profits. But the best UK shares have a track record of outperforming the market over years or even decades.
Today I’m going to look at two FTSE 100 stocks I’d be happy to buy today and hold for at least 10 years.
Family firm since 1935
My first UK share is Associated British Foods (LSE: ABF). This family-controlled FTSE 100 firm owns the Primark retail chain plus a wide range of food businesses, including Twinings, Kingsmill and Silver Spoon.
ABF has been in business since 1935 and is still managed by a member of the founding Weston family today. This continuity has paid off. A £2,000 investment in ABF in 1990 would be worth £20,000 today, plus dividends. Over the same period, a £2,000 investment in the FTSE 100 would have grown to just £5,750.
The coronavirus lockdown hit Primark hard. With no online trading, the group was completely shut for business during the period when non-essential retailers were closed. Profits from Primark are expected to fall by around 60% this year, to £300m-£350m.
Bouncing back
Associated British Foods reported a net cash balance of £936m at the end of last year. This allowed the group to go into the pandemic from a position of strength.
ABF’s unusually diverse mix of businesses has been an advantage too. Rising profits from the group’s food business have helped to offset lower profits at Primark.
At the time of writing, the ABF share price is trading at around 2,000p. That prices this UK share at about 16 times forecast earnings, with a dividend yield of 2.2%. I reckon this could be a bargain for long-term investors. I’m confident that anyone buying this stock today is likely to be ahead of the market in 10 years.
UK shares with international profits
It makes sense to ensure that your investment portfolio provides exposure to countries other than the UK. But investing directly in foreign stocks means getting to grips with foreign markets and paying higher share-dealing charges.
I prefer to invest in businesses that operate internationally. One of my top picks for international growth would be FTSE 100 stock Bunzl (LSE: BNZL). This firm may not be a household name, but it’s an essential supplier to businesses all over the world.
Bunzl sources and distributes a huge range of items such as cleaning products, food packaging and safety equipment. These are generally consumable items that require regular repeat purchases.
As you’d expect, Bunzl has traded well during the coronavirus pandemic. Strong demand for cleaning, hygiene and safety equipment lifted the group’s operating profit by 17% to £279.4m during the six months to 30 June.
Although the company suspended its dividend during the early part of this year, last year’s final dividend will now be paid, together with an increased interim dividend for 2020.
Bunzl’s strong performance this year isn’t just a flash in the pan. It’s been a long-term winner. A £2,000 investment in Bunzl in 1990 would be worth an astonishing £61,000 today.
Although the Bunzl share is trading close to all-time highs at the moment, I don’t think the stock looks too expensive on 20 times forecast earnings. As with ABF, I think this UK share is a solid long-term buy at current levels.