I am a believer in long-term investing. The reason for this is straightforward. If I buy a tiny stake in a great business, hopefully over the years the firm’s commercial success can help boost its share price.
In many cases I also aim to benefit from a stream of attractive dividends. Here is a trio of dividend-paying British shares I own in my portfolio and hope to keep for years.
Asset manager M&G operates in a sector I expect to benefit from resilient customer demand over the long term. Within that sector it has certain strengths I think can help it do well in the long term, such as its well-respected brand and long trading experience.
At the moment, M&G has what I see as a very attractive dividend yield, at 9.5%. The company’s policy is to maintain or increase its dividend annually. If the company manages to deliver on that, I think owning these income shares in my portfolio for years to come could be lucrative. However, dividends are never guaranteed.
British American Tobacco
Another high yielder among the UK shares I own is British American Tobacco (LSE: BATS). At 6.7%, the dividend yield is smaller than the one offered by M&G. However, the company has an impressive track record, having raised the payout annually for over two decades.
Can this last? One risk I see is a decline in the popularity of cigarettes, which currently form the bulk of the company’s business. That is a threat to both revenues and profits for the manufacturer.
However, I also see reasons to be optimistic about the outlook for the company. Cigarettes remain a massive cash flow generator. The business has also been growing its non-cigarette business at speed. For now, it remains a drag on profits. However, British American Tobacco estimates it will break even a couple of years from now.
The third in this trio of income-producing British shares in my portfolio is homewares retailer Dunelm (LSE: DNLM).
I reckon that while a housing market downturn could hurt sales and profits in the short term, over the course of the coming decade demand should remain robust. Dunelm has a proven business model that has been consistently profitable.
It benefits from a well-known brand, large store network and unique product ranges. All of those elements help to give the retailer a competitive advantage I think could help it keep making profits.
The dividend yield is 4%, even excluding the special dividends that the company has sometimes paid in recent years. After falling 24% in the past 12 months, Dunelm now trades on a price-to-earnings ratio of 12. I see that as attractive and would consider adding more of the shares to my portfolio if I had the spare cash to invest.
Because my colleague, Mark Rogers, has released this special report.
It’s called ‘5 Stocks for Trying to Build Wealth After 50’.
And it’s yours, free.
Of course, the decade ahead looks hazardous. What with rampant inflation, a “cost of living crisis” and war in Ukraine, knowing where to invest has never been trickier. And yet, with so many shares below recent highs, there are also potential opportunities to strike.
That’s why now could be an ideal time to secure this valuable investment research.
Mark’s “Foolish” analysts have scoured the markets low and high.
This special report reveals 5 of his favourite long-term ‘Buys’.
Please, don’t make any big decisions before seeing them.
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#ffffff”, ‘color’, ‘#FFFFFF’);
- 2 top dividend stocks for retirement
- 2 cheap shares I’ve bought to hold for 10 years!
- 3 high-yield income stocks to buy for 2023
- I’d buy 600 shares of this stock, for £100 in monthly passive income
- 2 dividend shares I’ve bought for lifelong passive income
C Ruane has positions in British American Tobacco P.l.c., Dunelm Group Plc, and M&g Plc. The Motley Fool UK has recommended British American Tobacco P.l.c. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.