You have until 5 April to use up this years 15,000 ISA allowance, and then from 6 April theres another 15,240 covering cash or shares with all returns tax free. That means you need some share ideas, so here are three that have been in the dumps and are looking good now:
Gas for your portfolio
Centrica (LSE: CNA) gave investors an unpleasant surprise when it sliced its dividend for 2014, by 21% to 13.5p, as profits fell. But even after the cut, it still yielded 4.8%, and thats way above the FTSE 100 average of around 3%. The share price took a tumble, and is down 24% over the past 12 months to 245p.
The 2015 dividend consensus has been reduced, and if it remains unchanged at 13.5p it would still yield 5.5% on todays price. As a comparison, a full ISA allowance invested in the owner of British Gas and Scottish Gas would net you 838 in dividends alone, while the same in the best cash ISA would get you only around 240 in interest.
Centricas forward P/E has dropped to under 13 now, and for me thats cheap for a company still paying strong dividends it deserves consideration for your ISA.
Which bank?
The banks are coming back to strength, so how about Banco Santander (LSE: BNC)(NYSE: SAN.US) as a perhaps non-obvious choice? Under previous boss Emilio Botn, Santander offered huge dividends in excess of earnings, made possible because most Spanish shareholders took scrip instead of cash. But that eventually dilutes the shares, and now that daughter Ana Botn has taken over the chair after her fathers death, the bank is moving towards more conventional payments.
As from 2015, the dividend yield should be down around the 3.6% mark, which is still healthy. And with the shares down 12% over 12 months to 475p, were looking at a forward P/E of under 9, dropping to under 8 on 2016 forecasts.
Banco Santander is the largest bank in the eurozone, and looks cheap to me at todays price.
A miner?
The mining business has been in trouble too, and BHP Billiton (LSE: BLT)(NYSE: BBL.US) shares are down 16% over the past year to 1,586p. But its a cyclical sector, and the price has actually recovered by 24% since a mid-December low. And though profits are down due to depressed commodities prices, BHP is still managing to raise production and shipments of its key products.
With EPS predicted to fall 37% for the year to June, the shares are on a P/E of 15. But the expected dividend yield stands at 5.1%. BHP is proposing a demerger under the name South32, and has said that if it goes ahead the dividend will not be rebased. An ISA full of BHP Billiton would provide 792 in dividends.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Centrica. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.