With interest rates being maintained at low levels in recent years, and any prospective increases not expected to set the world alight for savers, investing money in a Cash ISA is not something I’d consider any time soon.
Inflation rates are currently hovering around 2% in the UK, and the Bank of England base rate is currently sitting at 0.75%. This means keeping money in cash savings accounts could actually lead to less spending power.
Instead of storing my hard-earned dough in a Cash ISA, I’d look to invest in some top-performing FTSE 100 companies that I think will provide solid returns over the next 5 to 10 years and beyond.
The Footsie is made up of some of the biggest and most reputable businesses listed in the UK, many of which have a history of solid growth, responsible management, and consistent dividend payouts to their shareholders.
Two FTSE 100 companies that I’d invest in instead of a Cash ISA are Landsec (LSE:LAND) and Experian (LSE:EXP).
REIT price
Real estate investment trust (REIT) company Landsec, formerly known as Land Securities, has taken a bit of a battering in the market over the last number of years, but despite ongoing concerns about Brexit and the retail industry, the company has maintained a healthy dividend yield.
The shares have not performed strongly over the last year, pulling back around 3.5%, but a rally over the last month suggests to me that the trend could be moving upward again.
Landsec owns around £14bn in office, shopping centre, and warehouse space, with a large amount of their assets based in London. A fall in the value of some of these assets led to a full-year loss of £123m before tax, widening from a £43m loss the previous year.
Despite that, rental income from the firm’s real estate assets remains strong, with net income from these properties growing to £618m last year. This drove underlying pre-tax profit of £448m, an increase of 8.9%.
What really encourages me with Landsec, however, is its solid dividend payouts, which have grown consistently in the last five years, despite the challenging conditions – a positive sign for the income investor. It offers a yield of 5.32% based on its current share price of 855p.
Credit where it’s due
While I’d buy Landsec based on income prospects, I’d add credit score king Experian to my portfolio based on growth potential.
Recent trading updates have seen the company record impressive growth in profits over the last number of years, with its share price rising 160% in the last five years. In the last year alone, the stock has grown 31%, significantly outperforming the Footsie in that time.
One aspect of Experian’s business that it appears to have managed well during that time is the wide range of locations in which it offers its information services. Its last trading update showed growth of 9% in both North and Latin America, and, while revenue was flat in the UK and Ireland, there is clear potential for further growth in these new markets.
Experian has also begun to invest in new services as well as locations, including health, which opens up even further opportunities for growth.
While trading off a current price-to-earning ratio of 32 certainly does not suggest a lot of value in buying the stock, I see the outperformance continuing as the business diversifies and grows.
