There are a few excellent bullish traits when it comes to Stocks and Shares ISAs. One is the fact dividends received aren’t liable for tax. Plus, a generous £20k annual allowance is attractive.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
With the former in mind, it makes sense for me to buy and hold quality dividend stocks to help build wealth.
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Two stocks I’d love to buy for my ISA when I next can are GSK (LSE: GSK) and Lloyds Banking Group (LSE: LLOY). Here’s why!
GSK
Pharmaceutical giant GSK looks like an attractive prospect to me for a few key reasons.
Firstly, I reckon the drugs and medicine creator possesses defensive attributes. This is due to the essential nature of its work to help cure the world’s diseases, including cancer and HIV.
Next, it possesses some pretty attractive fundamentals, in my view. The shares look decent value for money on a price-to-earnings ratio of 15. This is lower than average of recent years so now could be a great entry point.
Furthermore, a dividend yield of 3.9% is decent, and could potentially grow. This is because of GSK’s health research and development pipeline of future drugs and treatments, which looks solid. However, it is worth mentioning that dividends are never guaranteed.
From a bearish perspective, ongoing legal troubles with its Zantac drug, which could lead to huge financial implications, is a dark cloud hanging over it. I’ll keep an eye on developments. However, this is a risk for all pharma stocks.
Overall, a track record of success in its field, dominant market position, shareholder value, and attractive fundamentals make GSK a no-brainer for me.
Lloyds Banking Group
As one of the so-called ‘big four’ banks in the UK, Lloyds possesses a vital position in the banking ecosystem in the country.
From a bearish view, new kids on the block and industry disruptors such as Monzo and Metro Bank are threatening to upset the status quo of the banking sector. They’re working hard on aspects like customer satisfaction, and offering customers an alternative. Dwindling market share could hamper Lloyds moving forward. In addition to this, economic volatility isn’t good news. For example, higher interest rates and mortgage costs could lead to loan defaults. This could hurt Lloyds bottom line and shareholder returns.
Moving to the other side of the coin, Lloyds is the largest mortgage provider in the UK. This could be a future money spinner for the business as demand for homes is outstripping supply. It could leverage its dominant market position into boosted earnings and hopefully pass this on to its shareholders.
Speaking of returns, Lloyds shares currently offer a dividend yield of 5%. Plus, the shares look great value for money on a price-to-earnings ratio of just eight.
Although economic volatility is currently rife, Lloyds’s track record, market position, and returns prospects make it a stock worth buying for me and my holdings.
