I recently took time to laud one of the core tenets of investing heavyweight Warren Buffett: to buy stocks with a view to holding them for a minimum of 10 years.
In it I wrote about Barratt Developments, a stock that I own and plan to hold for the next decade (at least), and explained why I have the confidence to expect that the country’s homes shortage will keep profits bounding higher through this period.
There’s no doubt that Britain needs to hurry up and get building over the next several years, and this plays into the hands of Ibstock (LSE: IBST). Like Barratt, I also own shares in this business, given the size of the UK’s housing supply imbalance and the length of time this will take to resolve.
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We already don’t have enough bricks to go round, as shown by most recent annual figures from the Brick Development Association. While British builders used 2.4bn bricks in 2017, only 1.9bn of these were supplied locally, the shortfall of half a billion or so being filled by foreign imports.
Production from the likes of Ibstock has risen over the past year in response to this demand imbalance, and is all set to continue doing so as housing build rates rise in the years ahead.
Build a fortune
The FTSE 250 firm is the biggest maker of clay bricks in the UK by volume and this puts it in a prime position to capitalise on the housing sector’s growing need for its product. Through its 20 or so manufacturing bases up and down the country it’s well placed to service homebuilders all over England, and the addition of its 100m-brick-per-annum site in Leicestershire last July bolstered its earnings outlook still further.
In the more immediate term, investors can look forward to chubby profits growth through to 2020 at least, or so say City brokers, and therefore more inflation-smashing dividends, too. Right now, Ibstock sports giant yields of 5.9% and 6.1% for this year and next, respectively, making it a great share for income chasers in particular to pick up today.
A bright spark
Another share I believe will continue thriving over the next decade is National Grid (LSE: NG). For the sake of stating the obvious, our need for electricity is only going to increase thanks to our growing population, and this makes the FTSE 100 firm a great pick to keep growing earnings.
But this isn’t the only reason I’m tipping the network operator to thrive. Its expansion onto the US Eastern Seaboard gives it great revenue possibilities on foreign shores as well. With National Grid’s tentacles spreading further into Europe too — in January its Nemo Link joint project was launched to create a power link between the UK and Belgium — the future looks extremely bright.
Reflecting this bubbly outlook, City brokers feel that dividends will keep heading northwards, meaning that yields sit at a stunning 5.6% and 5.7% for fiscal 2019 and 2020, respectively. I’d happily buy the business today and hold it for many years to come.
