I like to hold shares for a long time. After all, if I invest in a good company, I figure that with time, my returns could get even better. When it comes to dividend shares, there are some I think could be good to tuck away now in the hope they will still pay me dividends as I get older.
No dividend is ever guaranteed, though, which is why I diversify across different shares. Here are three I would buy now.
City of London Investment Trust
The City of London Investment Trust (LSE: CTY) invests in a variety of different companies, offering me exposure to different sectors. That should help it earn money across the economic cycle.
At the moment, the yield is 4.5%. I find that attractive and would be happy to receive it. But I am also impressed by the trust’s dividend history. It has raised its dividend annually since the England team won the World Cup. As any long-suffering football fan knows, that is a very long time!
Dividends are never guaranteed. One risk is a market downturn hurting returns at the companies in which the trust has invested. That could hurt its own profits. But with a long-term mindset, I would gladly tuck this share away in my portfolio.
Diageo
Another company that has raised its dividend annually for a long time is Diageo (LSE: DGE). The manufacturer of drinks such as Guinness and Lagavulin has clocked up over three decades of yearly increases.
Part of the reason it has been able to do this is the pricing power its portfolio of premium brands gives it. There simply is no direct substitute for a Guinness or Lagavulin. So when the company faces a risk to profits from cost inflation, as is happening at the moment, it can increase its selling prices without worrying that it will lose a lot of customers. That supports substantial profits – last year, the company reported £2.8bn in post-tax profits on revenue of over £19bn.
The Diageo share price is close to its all-time high, which has pushed the dividend yield down to 1.8%. But if I wanted to buy a share, tuck it in my portfolio and hopefully receive dividends from it for many years to come, Diageo would be on my shopping list.
Unilever
I would also buy Unilever (LSE: ULVR). Like Diageo, this UK multinational benefits from a portfolio of premium brands. Its products are used billions of times a day across the globe, meaning that there is steady customer demand. That can help to support both revenues and profits. The Unilever dividend is currently 4.2%.
I see a company like Unilever as a sort of bellwether for the global economy. I do not expect this stately business to move suddenly into a dramatic growth phase. But it ought to benefit from a growing global population and increasing disposable income in many markets. Conversely, a recession could force consumers to cut back on premium brands and hurt Unilever’s profits. But with an eye on the long term, I would be happy to buy and hold this share.
