In my opinion, there are many companies on the market right now that look too good to pass up. That’s why I’ve been buying a basket of them for my Stocks and Shares ISA recently.
Here are three of my top buys for 2021.
Stocks and Shares ISA buys
Due to the tax-efficient nature of Stocks and Shares ISAs, they’re the perfect wrappers for owning dividend stocks.
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That’s why I’ve been adding to my holdings of real estate investment trusts Landsec (LSE: LAND) and British Land (LSE: BLND) recently. These companies have been some of the biggest losers of the Covid-19 pandemic. Both have significant exposure to commercial property in their portfolios.
The forced closure of non-essential retail this year has had an enormous impact on commercial property values. Indeed, both companies marked down the value of their retail portfolios by a double-digit percentage for the first half. Office demand has also suffered, although as of yet, it is unclear if the pandemic will have a long-term impact on the office market.
With property values sliding, investors have been selling both companies in 2020. However, I think the market has got ahead of itself. At one point, shares in these two firms were trading more than 50% below their net asset values. This severely overstates even the most pessimistic forecast for commercial property value declines.
That’s why I believe the two companies offer value. After cutting their dividends earlier in the year, Landsec and British Land have restored their payouts. I think this could be a sign of things to come. Property price declines have been nowhere near as bad as expected. There are already signs that the market has turned a corner, especially in London. Therefore, I’m optimistic about the dividend prospects for these two businesses. I think I could generate a tax-free income stream when owned inside a Stocks and Shares ISA.
The best of both worlds
I’ve also been eyeing up financial services business IG Group (LSE: IGG). I think this company provides the best of both worlds for investors. The bulk of the company’s revenue comes from trading, which increases during bouts of market volatility. This suggests it could be a good hedge against uncertainty.
The group also charges a fee based on assets under management for certain clients. Rising stock markets push up the value of client assets, which should lead to increased asset management fees. Put simply, I think this company can profit no matter what the future holds for stock markets. This leads me to the conclusion that the company’s 4.5% dividend yield is extremely safe.
That’s why I’m looking at adding it to my Stocks and Shares ISA portfolio in 2021. According to my research, IG should be able to generate profits no matter what the weather.
