Have £10k to spend? I’d buy this 7% dividend yield for my ISA and hold it for 5 years

One of the keys to successful share investing is to only buy shares you’re confident enough to hold for an absolute minimum of five years.

Just as ‘a high tide lifts all boats,’ as the saying goes, the opposite is also true and so many great stocks can find themselves washed up when market volatility comes along. Buying and hanging onto shares for longer means you should be able to absorb any such whacks and still enjoy some excellent returns over the longer term.

Here, I’m discussing two such stocks I’m confident should thrive through to around 2025, at least.

Go postal

Royal Mail (LSE: RMG) and its shareholders really aren’t having the best of it right now. Challenging economic conditions and the impact of GDPR legislation have worsened the terminal decline in the letters market. The firm’s badly-misfiring, cost-cutting strategy and subsequent profit warnings haven’t exactly done Britain’s oldest courier any favours either.

But there’s some brightness in the gloom. The e-commerce explosion means parcels volumes continue to boom — up 8% in the UK, and 5% at its European and North American GLS division. All signs point to them continuing to swell. Indeed, latest data from the KPMG/Ipsos Retail Think Tank suggests 35% of all retail sales will be generated online by 2025, up from around 19% currently.

And Royal Mail is undergoing significant restructuring to create a parcels-led business to capitalise on this trend, measures which are driving volume growth ahead of the broader market. The FTSE 250 firm has much more up its sleeve too, like new parcel hubs to improve delivery from large e-retailers at home, and scaling up its GLS arm to win greater business overseas.

Right now Royal Mail is dirt-cheap, trading on a forward P/E ratio of 9.5 times. And I think such a rating fails to reflect the exceptional long-term opportunities for its parcels business. Combine a whopping 7.2% dividend yield too, and I reckon it’s a white-hot income share to buy today.

Good gold

Mining giant Polymetal International (LSE: POLY) is another top dividend share that should thrive well into the next decade as gold prices leap.

A galaxy of macroeconomic and geopolitical factors exist that are driving bullion demand right now and, according to the World Gold Council, these drove inflows into global gold-backed ETFs to 122 tonnes in August. The total now stands at 2,733 tonnes and is less than 60 tonnes away from the record all-time high.

And there are multiple themes, like ultra-low interest rates, to a sea change in global politics, which look set to persist well into the mid-2020s and to keep driving gold prices too. No wonder UBS, to name just one, expects metal values to keep swelling through the next few years at least.

At current prices, Polymetal also carries a monster 4.5% forward dividend yield and trades on a rock-bottom corresponding P/E multiple of 12.2 times. For investors looking to squeeze every ounce of value out of their investments, I reckon both this business, like Royal Mail, is a great stock to stash in your ISA today.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Motley Fool UK 2019