Sometimes I buy shares and then end up frittering away time closely following their price movements. I prefer buying shares I could tuck away for a long time and barely think about. So recently I’ve been considering what UK shares I would pick to hold forever.
Here are three UK shares I’d be happy to buy and hold indefinitely in my portfolio.
Legendary dividend payer
Engineering company Spirax-Sarco (LSE: SPX) is popular with some investors for its dividend record. With over half a century of annual dividend increases, I can see why. That record of consistent dividend raises has few peers in the UK market.
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But the dividend isn’t the only reason I would consider buying these UK shares and holding them. Dividends are never guaranteed, after all – even from such an historically strong payer.
I like the fact that the dividend history demonstrates a shareholder focus on the part of management. For a possibly enduring investment, I find that attractive.
I also think these UK shares benefit from a good business moat. Spirax-Sarco specialises in engineering solutions, many of which are bespoke. That gives it some insulation from competitive pressures, in my view. Customers will often be willing to pay a premium for reliable quality when it comes to critical engineering needs. If they previously had a good experience with Spirax-Sarco, they may come back with repeat business.
There are risks, of course. An economic stagnation could reduce customer spend and hurt the company’s revenues, for example.
UK shares with strong customer loyalty
How do I assess whether I might want to hold a share for a long time? One consideration is how durable I think the company’s customer franchise is.
For example, while a company like Boohoo may do well now, I expect it will need to invest heavily in marketing to keep its brand relevant as its customers age.
By contrast, Diageo owns brands such as Johnnie Walker. The iconic blended whisky has a tiered pricing structure. That means that it can offer something to a whisky drinker on a tight budget as well as the millionaire connoisseur. That is part of the attraction of these UK shares for me. I expect the company’s historical spending to generate customer loyalty that will continue for decades in some cases.
However, there are risks. The company’s premium focus could lead to sales falls in a recession. I also wonder whether younger consumers’ increasing abstinence from alcohol could hurt future revenues.
Overlooked performer
Another serial dividend raiser is DCC. DCC is not a very well-known name. The conglomerate operates under a number of business names. Like my other two picks, it benefits from long-term customer franchises, such as bottled gas customers in many European markets. It’s based in Ireland but UK-listed.
It’s more than just a gas supplier, though. DCC has other businesses such as technology and healthcare. That helps provide some diversification for these UK shares.
With a long history of dividend raises, I think the business model seems to be working well. However, risks include declining demand for bottled gas eating into revenues. The dividend is not guaranteed.
