There are a number of FTSE 100 stocks I’m happy to have bought and hope to hold forever. My list includes HSBC Holdings, M&G, Rolls-Royce and Scottish Mortgage Investment Trust. But if I was only allowed two of them I’d hang on to the following pair. I hold both in my Self-Invested Personal Pension (SIPP), and have absolutely no plans to sell them, ever.
Why do I rate Lloyds shares so highly?
My first pick is Lloyds Banking Group (LSE: LLOY). I think it’s a terrific portfolio building block. It offers investors both share price growth and dividend income potential, although like any stock, it’s not without risks.
Lloyds almost sank the UK economy during the financial crisis, and only survived after being bailed out to the tune of £20.3bn. At least taxpayers got their money back. Selling the government stake raised £21.2bn. But investors took a beating and Lloyds shares struggled for years. So I’m not getting too dewy-eyed here.
The company has exited its riskier operations and is now focused on the nuts and bolts of everyday personal and business banking. With luck, that should reduce future share price volatility. The downside is that the business may struggle to grow. Especially with smaller challenger banks snapping at its heels.
Despite that, it’s making a heap of money, as full-year profits show:
- 2025 – £6.7bn
- 2024 – £6.0bn
- 2023 – £7.5bn
- 2022 – £6.9bn
- 2021 – £6.9bn
But markets don’t just want to see big profits. They want to see those profits steadily increasing, and that may not always be possible, especially given the struggling UK economy. The Lloyds share price is up an impressive 145% over five years, although it might slow from here. With luck, the income should keep flowing. In the last three years, it has increased shareholder payouts by a generous 15%.
The stock is forecast to yield 3.74% this year, climbing to 4.4% in 2027. And it looks decent value, with a modest forward price-to-earnings (P/E) ratio of 11.5. It won’t always perform, but I think it’s worth considering for long-term investors.
Are BAE Systems share worth considering too?
My second buy-and-hold forever stock is FTSE 100 defence group BAE Systems (LSE: BA). I’m basing this pick on human nature. Sadly, humans may have evolved dramatically since the days when we first walked on two feet, but we remain a dangerous species. Now the West and Russia and China are facing off against each other again as in the Cold War. And we have to cope with Middle East uncertainty too.
Defence stocks have been the beneficiaries. The BAE Systems share price is up a staggering 268% over the last five years. However, it has been bumpy lately. Some investors will have banked their profits, and gone in search of the next big growth sector. Others may have decided the shares are too expensive, given the forward P/E of around 25. That’s understandable. Investing goes in cycles.
There are other risks. Cash-strapped Western governments may struggle to spend more on defence. Peace deals in Ukraine and Iran would be fantastic news for humanity, but a blow for BAE Systems shares. Sadly, another geopolitical threat would no doubt loom, making this another forever stock to consider.
Should you invest £5,000 in Lloyds Banking Group Plc right now?
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Harvey Jones owns shares in BAE Systems, HSBC Holdings, Lloyds Banking Group, M&G, Rolls-Royce and Scottish Mortgage Investment Trust.
