The new tax year will soon be upon us. It is a good time to start thinking of making a Stocks and Shares ISA allocation of £20,000 now, in my view. There are plenty of FTSE 100 stocks to choose from. This is particularly so right now, when the stock markets are gaining ground. This also creates a challenge though. How do I choose between long-term investments and those that are likely to do well when investors are bullish? Here are three investments that I intend to hold for the next 10 years at least (in alphabetical order).
#1. AstraZeneca: on the up and up
The pharmaceuticals biggie needs no introduction, especially not after Covid-19. I first bought AstraZeneca a few years ago, because it just looked like it was full of potential. The Anglo-Swedish company provides critical cancer treatments and is also expanding into new areas. Its recent acquisition of Alexion, which focuses on rare diseases is one such. The stock has a price-to-earnings (P/E) ratio of a huge 90 times, which indicates that it might be in for a correction. We will know for sure when the company releases full-year numbers in February. Over the next 10 years though, I expect it to rise more than fall, going by its profile and robust financial performance.
#2. Royal Mail: FTSE 100 turnaround star
Not long ago, Royal Mail had tumbled out of the FTSE 100 index as friction between the company’s management and its strong trade union continued endlessly. Things started turning around for the stock with a change of guard. And the Covid-19 crisis created unexpectedly high demand for its parcel services. By last year its share price rose enough to make a return to the FTSE 100 again. The pandemic might be close to its end, but e-commerce is firmly established now as an industry of the future. And Royal Mail plays a critical role in that. The company has warned of a profit hit as it axed 700 jobs recently, but in the scheme of things, I would not base my investing decisions in the stock on this alone. I have bought the stock for the next 10 years.
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#3. SSE: it’s all about green energy
This one has long been a no-brainer for me. Over the long term, the world will only move towards clean and green energy sources. The FTSE 100 utility SSE is already there. Its financials are robust and it also has an above-average dividend yield of 5.3%. FTSE 100 has an average yield of 3.4%. It also beats inflation, which is at an awfully high 5%+ annual rate right now. And considering that it is a utility, dividends are unlikely to be axed even in otherwise bad times. Its stock price has been weak in the past few months, which is a downer. But I doubt if this will matter over the next 10 years, that is why I bought it on a dip.
