I plan to hang onto these top FTSE 100 dividend shares for at least the next decade. Here’s why I think they’ve helped me build a winning stocks portfolio.
Ashtead Group
Rental equipment supplier Ashtead Group (LSE:AHT) provided the best returns of any UK share during the 2010s. And despite potential choppiness in the near term, I’m expecting it to provide excellent cumulative returns well into the next decade.
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The business — which operates the Sunbelt rental brand in the US, Canada and UK — doesn’t offer the biggest dividend yields out there. For the next two years (to April 2024 and 2025) these stand at 1.9% and 2.1% respectively.
But its impressive cash generation still makes Ashtead a winning stock to own today. It has underpinned an excellent record of annual dividend growth that I expect to continue. Furthermore, a strong balance sheet has turned the company into an industry titan through continuous mergers and acquisitions (M&A).
In its core US territory, the firm’s market share has soared during the past decade to 13%, making it the country’s second-biggest operator. It now operates around 1,130 stores in the States, and the highly fragmented rentals market leaves mountains of scope for further profits-boosting M&A. It spent $361m on nine bolt-on acquisitions between May and July alone.
A bright outlook for the US construction market — boosted by massive planned infrastructure upgrades — could help Ashtead deliver spectacular returns again this decade.
Unilever
Like any stock, Unilever (LSE:ULVR) isn’t immune to danger. Navigating the problem of rising costs, for instance, has been a big problem at the consumer goods giant of late. Yet it’s still one of my favourite ‘lifeboat’ stocks thanks to its great track record of growing profits, whatever the weather.
Latest financials last week showed how robust the Magnum ice cream and Dove soap manufacturer’s operations are. Underlying sales grew 5.2% in the three months to September despite the ongoing cost-of-living crisis. This was driven by a 5.8% improvement in pricing that more than offset a 0.2% volume decline.
Unilever can thank the immense brand power of its product ranges for this resilience. Consumers will still stack their baskets with Unilever goods even during lean times. The company can even get away with hiking prices to help offset the problem of rising costs.
Having a beloved product portfolio is only part of the story, however. A focus on the highly defensive food, personal care and household goods markets provides earnings with added stability.
Finally, Unilever’s broad geographic footprint spanning nearly 200 countries stops group earnings from diving when difficulties emerge in particular regions. As a long-term investor, I also like the company’s huge emerging market exposure, which could lay the foundation for explosive earnings and dividend growth in the coming decades.
Recent share price weakness results in healthy dividend yields of 3.9% and 4.1% for 2023 and 2024 respectively. These readings beat Unilever’s historical readings, and also surpass the FTSE’s forward average of 3.8%.
Like Ashtead, I plan to hold the consumer goods champion for long into the future.
