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I believe long-term investors should seriously consider buying these FTSE 100 and FTSE 250 shares. Here’s why.
Harnessing the green revolution
Britain has some of the world’s most ambitious renewable energy targets, which bodes well for companies like Greencoat UK Wind (LSE:UKW). By 2030, the government plans to meet 100% of the country’s total energy demand with clean sources.
This provides an attractive place for green energy providers to invest. Changes to onshore wind farm planning rules will make it easier for businesses to expand. And the Contracts for Difference (CfD) model — which guarantees a multi-year fixed electricity price — is run in a way that provides better revenues visibility than operators in most other countries enjoy.
As its name suggests, Greencoat UK Wind’s portfolio just covers these shores, proving maximum exposure to this environment. On the downside, this narrow footprint leaves group earnings more vulnerable to localised weather patterns. However, the country’s assets are located across all the home nations and on land and sea, which reduces this threat.
Brand heavyweight
The rising popularity of local household goods manufacturers poses a threat to the established industry giants like Unilever (LSE:ULVR). But I’m hopeful the FTSE 100 company has what it takes to weather the storm — after all, it’s been leading in its markets since the late 1920s.
Revenues certainly continue chugging higher for now, an especially impressive feat as cost-of-living crises linger in some regions. Underlying sales increased 3% in the three months to March, with volumes rising even as price increases came into effect. This illustrates the mighty brand power of brands from Dove soap and Axe deodorant to Hellmann’s mayonnaise.
Largely speaking, Unilever’s diversified model across geographies and product lines gives it excellent long-term earnings visibility. With heavy exposure to fast-growing emerging markets, too, it has considerable scope for long-term growth.
Home comforts
The UK’s huge shortage of residential rental properties is well documented. The exodus of buy-to-let investors threatens to make it worse.
Build-to-rent (BTR) specialists like Grainger (LSE:GRI) stand to be big winners from this trend. Government plans to supercharge housebuilding could limit this growth opportunity, but the massive market shortfall will take years and significant effort to solve.
In the meantime, rents in the UK remain on course to continue rising at breakneck pace. Latest Office for National Statistics (ONS) data showed private rents soared 6.7% in the 12 months to May.
Grainger is expanding to capitalise on these favourable conditions as well. Its £1.3bn BTR pipeline includes around 4,500 homes. It’s expected to boost earnings (on a European Public Real Estate Association, or EPRA, basis) by 50% between last year and 2029.
One final thing: the company’s plans to transition to a real estate investment trust (REIT) could make it an excellent passive income share. Under sector rules, REITs must pay out at least 90% of annual rental earnings in dividends.
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