5 stocks with 5%+ yields I’d love to buy and hold in a Stocks and Shares ISA

Harvey Jones is keen to add these five FTSE 100 high-yielders to his Stocks and Shares ISA, ideally before they recoup their lost value.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Front view photo of a woman using digital tablet in London

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The stock market dip feels like a brilliant opportunity to add great value dividend-paying FTSE 100 companies to my Stocks and Shares ISA. Plenty of my favourite stocks are suddenly cheaper, and their yields look more compelling too.

Here are five great income stocks I’d happily consider buying today and holding for years when I have the cash. All yield 5% and in some cases a fair bit more, and have bags of comeback potential.

FTSE 100 income heroes

Family-controlled fund manager Schroders (LSE: SDR) baffles me. It’s looked like an unmissable bargain buy for years. But investors who dived in will probably have regretted it. Its shares are down 14.53% over one year and 28.28% over five.

It’s been hit by the turmoil of the last few years. This has rattled stock markets and hit customer inflows and net assets under management. It looks decent value as a result, trading at 12.6 times forward earnings, although not dirt cheap. But its 5.71% trailing yield is difficult to resist. That’s forecast to climb to 5.9% in 2024, covered 1.5 times by earnings.

Shareholder payouts have been fairly solid over the last decade, but dividend per share growth appears to have stalled lately. Let’s see what the charts say.


Chart by TradingView

I’d expect Schroders to revive when interest rates fall, the economy rebounds and investors get their mojo back. Let’s hope that this time it really does live up to its potential.

The commercial property sector has had a tough few years but I expect it to come tearing back when interest rates fall and economic optimism rises. Land Securities Group announced last month that it had almost halved first-half losses. But its shares have yet to recover. They look good value and so does the yield, as my table shows.

StockPrice-to-earnings ratioDividend yield
Land Securities Group12.5x6.33
NatWest Group6.4x5.41%
Rio Tinto9.1x6.57%
Sainsbury’s11.99x5.01%
Schroders15.3x5.71%

The NatWest Group share price is up a blockbuster 30% over the last year. Trading at just 6.4 times trailing earnings, it looks like there’s room for more and the yield is a meaty 5.41%. Falling interest rates may squeeze net interest margins. But they may help the banks in other ways, say, by reviving the mortgage market and cutting debt impairments.

Dividend stars

Mining giant Rio Tinto has been hit by the slowing Chinese economy. It’s another stock that could get a tonic when interest rates are cut. Its shares are up just 2.29% over 12 months, trailing the FTSE average return of 8.98%. This offers scope for recovery and the low valuation and high yield look tempting to me.

Grocery chain Sainsbury’s is another with a solid yield and undemanding valuation. Its shares have barely shifted over the last year.

I think there’s bags of comeback potential here, although it needs to go some to make ground on sector leader Tesco. I like out of favour shares, and it’s about time the market shows these some much-needed love. Hopefully, they’ll spring into life after I add them to my Stocks and Shares ISA, rather than before.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended J Sainsbury Plc, Land Securities Group Plc, Schroders Plc, and Tesco Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

With a P/E ratio of 9, is the Aviva share price a bargain?

Christopher Ruane looks at the Aviva share price and considers some strengths and weaknesses of the FTSE 100 insurance business.

Read more »

Surprised Black girl holding teddy bear toy on Christmas
US Stock

Is it too late to buy growth stock Shopify after its 25% pop?

Up more than 40% this year, Shopify is on fire at the moment. Here, Edward Sheldon explains how he’d play…

Read more »

Investing Articles

Investors should consider buying this energy AIM stock, up 50% in the past year

AIM stock Afentra has seen a stellar price rise in 12 months to November. I believe there may be room…

Read more »

Investing Articles

2 ISA shares to consider for a large passive income!

Looking for dividend shares to buy in a Stocks and Shares ISA or Lifetime ISA? Royston Wild reveals two of…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

A Bitcoin investment that can be held inside a Stocks and Shares ISA or SIPP

UK investors can’t buy Bitcoin ETFs for their investment accounts or SIPPs due to FCA regulation. This stock could be…

Read more »

Entrepreneur on the phone.
Investing Articles

As the Vodafone share price slides 6% on lacklustre H1 results, what does the future hold?

After posting moderate results this morning, Vodafone saw its share price sink further, erasing this year's gains. Our writer looks…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing For Beginners

If I’d invested £5k in a FTSE tracker fund after the pandemic crash, here’s what I’d have now

Jon Smith explains the extent of his potential gains if he'd invested in a FTSE tracker fund during the Covid…

Read more »

Investing Articles

2 top shares I’ve bought for my Stocks and Shares ISA in November

This writer reveals a pair of fast-growing businesses that he's recently added to his Stocks and Shares ISA for the…

Read more »