2 FTSE 100 shares to buy and hold for a decade

  • October 8, 2021
  • 52 Views

As I look to diversify my investment portfolio, now seems like an excellent time to add some stable FTSE 100 shares to it. I like the idea of retiring early and these are the two Footsie stocks I’d buy and hold for the next decade with that aim in mind.

Global alcohol giant

I’m very optimistic about the potential of Diageo (LSE: DGE) shares. And my reasons are simple. It’s a global force in the alcohol market and has made huge strides in emerging markets. I watch the Asian markets closely and the buying potential of the region could explode over the next decade. For Diageo, these are huge alcohol markets as well.

Countries like China and India lag behind many European countries in terms of per capita alcohol consumption. But they more than make up for it in sheer volume purchased. In fact, China is the world leader in alcohol sales, outstripping the UK, US and Germany combined.

The Asia Pacific region accounts for 20% of the group’s net sales. Diageo’s annual report detailed impressive expansion plans in China and India. The company has identified baijiu and scotch as the two potential market-leading segments in the greater China region. Similarly, Diageo has acquired some of India’s largest distilleries and mid-segment and luxury spirits including McDowells’s No.1 and Royal Challenge.

With net sales of £12.7bn and revenue of £3.7bn in 2021, the company’s core financials look strong. It also reported a £1.3bn jump in cash reserves to £3.7bn in 2020/21.

Increasing alcohol regulations and export taxes coupled with a steady drop in global alcohol sales are concerns for Diageo. The company isn’t doing much to add non-alcoholic alternatives to its catalogue. This could prove detrimental with the emergence of health-conscious youth across the world. But I think Diageo’s global presence and expansion plans make it an excellent FTSE 100 share for my long-term portfolio.

Fashion and Luxury

The next company on my list of FTSE 100 shares to buy is Burberry (LSE: BRBY). The British luxury fashion brand is another company that can benefit from the growing spending potential of the Chinese middle class.

Research predicts that China will become the biggest global market for luxury goods by 2030, overtaking the US. That’s a big plus for Burberry. The increasing popularity of labels such as Burberry and other luxury names in China is a sign of a major shift in consumer mentality.

Looking beyond that one country, Burberry’s 90% increase in physical store sales in 2021 from 2020 and 1% increase from pre-pandemic 2019 levels, is a further sign of its increasing strength.

But there are risks too. China’s recent wealth redistribution efforts triggered a 6.8% fall in the share price in the last six months. Although this is a concern, analysts are still bullish about the growing buying potential of the region.

Another concern for me is big changes to the company’s leadership. Chief executive Marco Gobbetti’s forthcoming exit could shake things up and until we know who will replace him, it creates uncertainty.

Despite this, I remain confident of the Burberry brand’s growth potential, whoever’s at the helm. Given its global presence and the cultural shift, it looks like an excellent FTSE 100 share for my portfolio.

The post 2 FTSE 100 shares to buy and hold for a decade appeared first on The Motley Fool UK.

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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry and Diageo. 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.

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