It’s new ISA time again, and we have a whole new £20,000 allowance. So what’s the best way to start? For me, in a new ISA, it would be UK dividend shares.
I’d want a diverse selection, to reduce my risk. I don’t want too many in any one sector that might go through a rough patch.
Diverse
I see many good picks in both the FTSE 100 and FTSE 250. So here are 10 candidates for a long-term Stocks and Shares ISA.
| Company | Recent price | 12-month change | 5-year change | Dividend yield |
| Taylor Wimpey | 118p | -10% | -37% | 8.2% |
| British American Tobacco | 2,859p | -13% | -32% | 8.1% |
| Legal & General | 247p | -9% | -8% | 8.0% |
| Glencore | 484p | -7% | +41% | 7.9% |
| abrdn | 205p | -0.2% | -52% | 7.3% |
| Primary Health Properties | 107p | -30% | -3% | 6.4% |
| Man Group | 210p | -12% | +11% | 6.1% |
| Lloyds Banking Group | 50p | +11% | -29% | 4.9% |
| City of London Investment Trust | 424p | +0.4% | +1.4% | 4.8% |
| National Grid | 1,153p | -5% | +37% | 4.5% |
These are forecast dividend yields, and there’s always a chance they could be cut. I have Glencore in there, and it’s had a few cuts in the past 10 years. But good income over the long term is what counts for me.
Favourites
This is by no means my top 10 income stocks of all time. These are just the ones on my list of ISA candidates that I think I like the best right now. Ask me again in a few months, and I might have my eye on some others. But they’ll still have a lot in common.
The key for me is good income over the long term. That’s because I don’t want to take the cash now, I want to use it to buy more shares. So it really doesn’t matter to me if it’s up one year, down the next.
Retire
When I come to retire, I’ll change that. When I do want to take my income each month, I’ll want more steady dividends with less up and down from year to year.
So I might then move more to things like City of London, which has raised its dividend every year for 56 years in a row.
National Grid also has been one of the steadier dividends over the years. So I might move more heavily into that.
For now though, I just want to build the best pot I can over the next 10 years and more. That’s why I don’t mind the risks of, say, buying a house builder.
Risks
Dividends could be cut, and share prices could fall while there’s a property slump going on. But those are short-term risks. And, after all, I see no end to our chronic housing shortage any time soon.
So to summarise, I’m not recommending this as a Stocks and Shares ISA portfolio. And I can’t cover the risk of all 10 of these here today.
I do however think this a good starter list of dividend shares to consider for a new 2023 ISA.
