Stock market

I would buy 3 UK shares for my ISA — and hold for the long term.

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I see investing as a long-term activity. If I can buy shares in big companies for my ISA, I think it makes sense to hold them for years and hope that business success is reflected in the share’s performance.

With this long-term approach to investing in mind, here are three shares I’d be happy to hold in my ISA for years to come.

Unilever

Years and decades from now, billions of people will still be shampooing their hair and washing their clothes regularly.

This ongoing demand explains the appeal of the consumer goods industry. But a lot of companies operate in this space – so I’m looking for the ones that I think have a competitive advantage. That is where Unilever (LSE: ULVR) looks for my ISA.

Like the owners of brands Pigeon And Marmite Able to charge premium prices for its products thanks to unique branding and proprietary formulations.

Unilever’s products are used by billions of people every day, making it a profitable machine. Last year, the London-based firm made an after-tax profit of around £6bn.

A weak economy in some markets could see lower sales of premium products, which could hurt sales. Unilever’s price-to-earnings ratio of 19 is higher than I’d like (and higher than a few months ago) but if I had spare cash in my ISA, I’d be happy to spend some on shares in the soap maker.

The Phoenix Group

Another part I’d be happy to add to my ISA is if I have some spare cash to invest. FTSE 100 The financial services giant Phoenix (LSE: PHNX).

The firm’s portfolio of pension and retirement companies is a significant generator of cash. This has helped Phoenix grow its profits annually in recent years.

Last year saw a dividend growth of around 3.6%. This means Phoenix now offers a dividend yield of 10.6%, putting it in the very top tier of FTSE 100 shares in terms of yield.

Profits are never guaranteed, of course, and like all firms, Phoenix faces risks. For example, it maintains an extensive mortgage book. If the property market correction leads to higher-than-expected losses on the mortgage book, returns could be reduced.

But from a long-term perspective, I think this proven income component will be a good fit for my ISA.

British American Tobacco

Another part I’ll happily keep in my ISA for years is something I already own and have no plans to sell: British American Tobacco (LSE: BATS).

On the surface, the risk here may seem too high despite the attractiveness of the 9.7% yield. After all, cigarette consumption is declining in most markets. As the company noted last week, industry-wide cigarette volume in the key U.S. market is down 9% so far this year from the same period last year.

But the company has proven it can weather storms before. It is investing heavily to expand its non-cigarette business. It is selling shares of an Indian company and buying back its own shares, making it cheaper to maintain its juicy profits.

It maintained its outlook for this year and expects to maintain growing revenues in the coming years. I intend to keep a share of this lucrative income.


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