The future is always uncertain, but I’m confident I could choose FTSE 100 stocks to buy today that I’d be happy to hold for the next decade.
To be clear, I don’t have any insider insight or secret formula to help me choose stocks. My approach is much simpler. I look for profitable businesses with a long track record of delivering essential products or services.
I also look for evidence of reliable dividend payments. These are a good sign that a company generates surplus cash. Dividends also provide a useful income that I can reinvest, or withdraw in cash.
Should you invest £1,000 in Tesco right now?
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Here are three FTSE dividend shares I’d be happy to buy today and hold until 2033.
A 187-year track record
My first choice is savings and insurance group Legal & General Group (LSE: LGEN). This well-known company has been in business since 1836. Today, it manages more than £1.4 trillion in assets, including property, stocks and bonds.
This business has a strong track record of profitability, and L&G’s predictable cash flows support a 7.5% dividend yield.
However, the stock’s high yield and low price-to-earnings ratio of seven suggest to me that investors might be concerned about the impact of changing market conditions.
Another worry may be that long-serving chief executive Sir Nigel Wilson has just announced plans to retire. Change at the top is always a risk, but I’m reassured by the group’s 187-year history.
I own L&G shares and plan to continue holding them for many years.
Quality assurance is essential
My next pick is a business that’s a market leader in the quality assurance sector. Intertek (LSE: ITRK) provides a huge range of testing and certification services to industrial and consumer clients all over the world.
Examples include battery testing, agricultural testing and inspection and quality control for beauty products.
I see Intertek as an essential service provider for most of its clients, with plenty of repeat business from major customers. Profit margins are high. However, Intertek shares rarely look cheap. Demand could fall during a recession too.
There are always risks but, on balance, I think this is a quality business that can justify a premium rating.
Intertek shares currently trade on 20 times forecast earnings, with a 2.6% dividend yield. I see them as a long-term buy at this level.
Much-loved consumer brands
Associated British Foods (LSE: ABF) is my final choice. This family-controlled business is known for affordable grocery brands such as Kingsmill and Patak. It’s also the owner of value fashion chain Primark.
In addition to its food and fashion/lifestyle businesses, ABF also owns a range of agricultural operations, producing sugar and other commodities.
However, ABF was hit hard by the pandemic when its Primark stores were forced to close. But post-pandemic earnings bounced back last year, with pre-tax profit up 48% to £1,076m.
This strong performance has supported a share price rally that’s left ABF stock trading on 16 times forecast earnings, with a 2.4% yield.
ABF shares don’t look quite such good value as they did a few months ago. Even so, I think they’re well-priced as a long-term investment.
