3 British shares I’ve bought to hold for years

I believe in long-term investment. The reason for this is straightforward. If I buy a small share in a large business, I hope that over the years the company’s commercial success will increase the share price.

In many cases, I also aim to benefit from an attractive dividend stream. These are a trio of dividend-paying UK stocks that I have in my portfolio and hope to hold onto for many years.

M&G

Asset manager M&G working in the sector I expect to benefit from long-lasting customer demand. In the sector, there are certain strengths that I think will help us well in the long term, such as respected brands and long trading experience.

Currently, M&G has what I see as a very good dividend yield, at 9.5%. The company’s policy is to maintain or increase the dividend every year. If the company manages to deliver, I have these income shares in the portfolio for the coming years can be lucrative. However, dividends are never guaranteed.

British American Tobacco

Another high yielding UK stock I own is British American Tobacco (LSE: BATS). At 6.7%, the dividend yield is smaller than what M&G offers. However, the company has an impressive track record, having raised its payout every year for over twenty years.

Can this last? One risk I see is the decline in popularity of cigarettes, which is now the company’s business. This is a threat to profits and profits for manufacturers.

However, I also see reasons to be optimistic about the company’s prospects. Cigarettes remain a huge cash flow generator. The business has also rapidly expanded its non-tobacco business. For now, it remains a drag on profits. However, British American Tobacco expects to phase out a few years from now.

Dunelm

The third in a trio of income-producing UK stocks in my portfolio is the homeware retailer Dunelm (LSE: DNLM).

I think that while the downturn in the housing market may hurt sales and profits in the short term, over the coming decade demand should remain strong. Dunelm has a proven business model that is consistently profitable.

It benefits from a well-known brand, a large network of stores and unique products. All of these elements help give retailers a competitive advantage that I think can help them make a profit.

The dividend yield is 4%, even if it does not include special dividends that the company sometimes pays in recent years. After falling 24% in the last 12 months, Dunelm is now trading at a price-to-earnings ratio of 12. I see that as attractive and would consider adding more shares to my portfolio if I had spare cash to invest.