3 UK shares to consider as a long-term investment for retirement
To retire comfortably, I’m searching for the best UK shares for long-term growth.
The UK market’s uniquely positioned to provide a stable foundation for long-term investment. Some of the top British stocks in 2025 have been around for over 100 years, delivering consistent value to investors since the 17th century.
Such well-established companies offer an excellent foundation to build on.
I’ve identified three FTSE 100 shares that fit the criteria, each boasting a strong dividend history, global reach, broad diversification and a sustainable business model.
| Company | Dividend Yield | Revenue Growth | Key Strengths | Risk Factors |
|---|---|---|---|---|
| Unilever | 3.5% | ~7% | Global reach | Cost inflation |
| Diageo | 3.1% | ~6% | Brand loyalty | Economic sensitivity |
| Tesco | 3.3% | ~4.4% | Market dominance | Industry competition |
A consumer goods giant
Unilever’s (LSE: ULVR) a consumer goods giant with a a £114.2bn market-cap and a diverse portfolio of globally recognised brands. The shares are up from around £10 in 2005 to £45 today, with revenue in 2023 reaching almost £60bn. Over the past 20 years, it’s held a consistent yield of around 3% with annual dividend growth of around 5% a year.
A key attraction is its stable and defensive nature. Historically, it’s remained resilient during economic downturns.
But it still faces challenges. Rising inflation has revealed flaws in its model, with cash-strapped consumers opting for lower-cost alternatives. If it fails to address changes in economic behaviour, it risks losing market share to competitors.
It recently announced a restructuring effort to save £670m which includes 7,500 job cuts and the sale of its ice cream brands Ben & Jerry’s and Magnum.
A global brand leader
Diageo‘s (LSE: DGE) a worldwide distributor of premium alcoholic beverages, flaunting a portfolio of famous brands such as Guinness, Smirnoff and Johnnie Walker. Its focus on emerging markets in Asia and Africa has helped drive profits in recent years.
For over 20 years, dividends have grown at an average annual rate of 5.4%, achieving a yield between 2% and 4%.
However, the company risks losses as inflation has led to consumers shying away from premium brands. Revenue declined from £17.1bn to £16.1bn last year, bringing down net income by 17.5%. This trend’s exacerbated by the growing popularity of healthier, alcohol-free lifestyles among younger generations.
To avoid losing market share, a shift in focus to healthier products may be necessary.
A retail giant
Tesco’s the country’s leading supermarket chain, with over 4,270 stores across Europe. It commands a dominant market share and enjoys high turnover. As a highly defensive stock, it benefits from steady consumer demand even when the economy dips.
Revenue for 2023 came in at £68.19bn with an operating profit margin of around 3.8%. Its dividend yield sits around 4.3% and is well-covered by cash flow with a long history of payments.
Recently, it’s come under pressure to improve sustainability and reduce carbon emissions, resulting in higher operational costs and threatening profits. While this may limit short-term price growth, the long-term benefits are worth it.
Compounding returns
When thinking of retirement, the power of compounding returns cannot be understated. It makes it possible to snowball a small investment into something huge. Plus, focusing on multi-year gains (rather than monthly) helps avoid panic-selling during minor dips or short-term volatility.
I believe the above three stocks are worth considering for investors looking to achieve long-term growth.
The post 3 UK shares to consider as a long-term investment for retirement appeared first on The Motley Fool UK.
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More reading
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- Will ‘biggest ever Christmas’ help keep the Tesco share price climbing in 2025?
- 2 no-brainer FTSE 100 value shares to consider buying in 2025
- 9,400 points? Here’s what one bank’s forecasting for the FTSE 100 stock market
- Why is FTSE 100 stock Unilever tanking?
Mark Hartley has positions in Diageo Plc, Tesco Plc, and Unilever. The Motley Fool UK has recommended Diageo Plc, Tesco Plc, and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
