The stock market can seem a frenetic place, with lots of buying and selling. But some very successful investors simply buy UK shares and hold them forever.
That can be an attractive strategy for several reasons. Not only does it remove the commissions involved in frequent trading, it also allows one to stay away from the stock market for years at a time. Legendary investor Warren Buffett has said that it wouldn’t bother him if the stock market closed for years, as once he has bought shares his ideal holding time would be forever.
That’s not true for all shares – Buffett does sell as well as buy. But here are two UK shares I would consider buying today and holding for the rest of my life.
Household name with wide customer base
Unilever (LSE: ULVR) is a household name. The fast moving consumer goods giant has a stable of brands including names like Surf, Domestos, and Knorr. Its products are sold in more than 190 countries and the company says 2.5bn people use its products every day.
One of the reasons I like Unilever as a UK share to buy and hold is that I expect long-term demand for the sorts of products it sells. No matter what, I expect people will still be using shampoo and soap. Of course demand may go up and down – the pandemic increased demand for cleaning products, for example, but that could be a blip.
But I think Unilever is well-prepared for the future. By owning brands selling at different price levels, it is able to offer something to customers across the economic spectrum. That is helpful as the company seeks to capitalize on emerging markets in Asia and Africa, for example. One risk is an economic downturn seeing consumers trade down.
Despite this, the Unilever share price is down 8% over the past year. I regard it as a bargain to buy and hold, which is why I bought some shares.
UK shares to hold
A fairly similar company is Reckitt Benckiser. Like Unilever, it is a consumer goods powerhouse operating across many markets.
I would consider holding it forever on the same reasoning I used for Unilever. Its brand portfolio includes iconic names like Dettol, Scholl, and Vanish. I think that helps build customer loyalty. Reckitt has proven itself good at stretching its brands into new areas, with Scholl being such an example.
Additionally, its dividend yield of 2.8% is attractive. Unilever’s stands at 3.7%, which is better, but I think Reckitt has room to grow its dividend in future thanks to its current growth initiative which aims to transform financial performance. Of course, dividend payments are not certain – they can be cut at any time.
However, a costly infant formula acquisition continues to weight on results. It also means that the company’s balance sheet continues to carry a lot of debt. I think the company can manage this – last year it reduced net debt by £1.7bn. But it still stands at £9bn.
Long term, I believe both these UK shares have the potential to earn substantial sums for decades. I would consider buying both of them now and holding them forever.