What shares should you put into your brand new 2015 ISA allowance? You can shelter up to 15,240 from tax starting 6 April (on top of the 15,000 allowance from the year just ending), and it can make a lot of sense to build a diversified portfolio. Here are three quite different stocks to consider:
Every ISA should have a handful of good dividend stocks, and they dont come much better than utilities providers, which are able to pay out the lions share of their annual earnings. SSE (LSE: SSE) is in that happy band, with a yield of 6.1% forecast for the year ending March this year and by utilities standards, it should be reasonably well covered. SSE also operates a scrip dividend scheme, so you dont even have to take cash and shoulder the dealing costs of reinvesting it.
To put it into perspective, its the equivalent of a cash return of 930 on a whole ISA allowance, compared to the mere 240 youd get from the very best cash ISA and would you really go for cash when its so easily beaten by shares?
Will SSE cut its dividend the way Centrica did recently? Judging by its January update, no the firm said it expects to report an increase in the full-year dividend for 2014/15 that will at least be equal to RPI inflation and plans to continue to beat inflation for 2015/16 too.
British American Tobacco
Ethical issues are for you to decide, but purely on financial grounds I like British American Tobacco (LSE: BATS)(NYSE: BTI.US). Although actual cigarette volumes are falling and have been for some years, the great bulk of those sold are at the lower-margin end of the business, and theres still plenty of scope for upselling as developing world incomes continue to grow.
In 2014, British American enjoyed a 5.8% rise in sales of its Global Drive Brands, which include Dunhill, Rothmans and Pall Mall, and continued its policy of lifting its dividend in real terms.
After a 12-month rise of 16% to 3,695p, the shares are on a forward P/E of 17.7 for 2015, dropping to 16.4 a year later. With dividends set to yield more than 4%, that doesnt look expensive.
As a recovery candidate, miner Anglo American (LSE: AAL) has to be worth a look. Underlying earnings fell 17% in 2014, even though production figures were up but prices are still depressed. Theres a further EPS fall forecast for this year before we can expect a return to growth, but despite that a 12-month fall in the shares of 28% to 1,064p makes them look cheap to me.
Unless its cut, which seems unlikely at this stage, the mooted dividend would yield 5.3% this year. Anglo American deserves consideration.
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