Do you want to invest to get richer? If so, in this article I’ll show you which two FTSE 100 shares I think could be the most worthwhile investments to hold for the next decade. For most investors a decade is a good timeframe, it’s long enough to ride out short-term market volatility and give investments plenty of time to rise. It’s often recommended that investors adopt a long-term mindset and it’s an approach endorsed by some of the most successful investors ever, including Warren Buffett.
Set for long term gains
Reckitt Benckiser (LSE: RB) owns brands such as Dettol, Durex and Nurofen and this week reported positive results. Better sales in the fourth quarter meant underlying like-for-like sales (LFL) for the full year rose by 3% and this pleased investors, sending the shares up after the results were reported. Full-year operating profit (adjusted for currency moves) rose 12% to £3.4bn and reduced marketing spend saw underlying margins rising to 26.7%, up 0.2%.
With CEO Rakesh Kapoor leaving at the end of this year, the future for Reckitt is a little more uncertain, but the consumer goods giant has high margins, a strong product portfolio and a good record of shareholder returns so any new management would be mad to radically change the strategy of the group.
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But despite the share price rise of 24% in the last five years, versus a 5% rise for the FTSE 100, some investors aren’t happy. The main issue is around integrating the Mead Johnson acquisition which cost Reckitt $17.9bn. It needs to better integrate the business that brings it more sales in fast-growing Asia. But it also needs to avoid costly controversies such as the cyber attack that cost it £90m of sales in 2017 and payouts for deaths from a faulty product in Korea for which it is paying out hundreds of millions in compensation, then the future should be more profitable for investors.
Selling more drugs
AstraZeneca (LSE: AZN) is a pharmaceutical company returning to growth which is great for investors. In its full-year results released this week, product sales rose 4% at constant exchange rates (CER) to $21bn, and in the fourth quarter, product sales jumped 8% thanks to a strong oncology performance – an area Astra is really focusing on.
Oncology sales for the full year rose 49% to $6bn, vindicating the strategy of management since turning down a bid from Pfizer in 2014. Astra’s other two growth areas, New CVRM and Respiratory, saw sales rise 12% and 3% to $4bn and $4.9bn respectively.
The company is not without risks, namely debt of $13bn, 29 major regulatory or trial deadlines in 2019 and a 14% fall in sales of gastro-intestinal drug Nexium which is AstraZeneca’s third-largest drug by sales. For an investor with a long-term mindset, however, these risks are not unique to Astra and if the company can find new blockbuster drugs, then there will be significant opportunities to grow the value of the company and reward shareholders.
With both these companies, the price right now is less important than what the company will be worth in a decade’s time, this is why I haven’t focused on P/E ratios as usual and other similar measures of value. Over a long timeframe, the market-leading positions of these companies will I believe lead to share price growth and both also offer decent dividend yields to investors.
