Forget a Cash ISA! Here are 3 shares I’d buy for my Stocks and Shares ISA

I think these three are solid, dividend-paying shares capable of growth from where we are now.

| 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.

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.

With Cash ISA interest rates running around 1.5% or below, there’s a good chance that even compounding the money by leaving the interest in the account will leave your returns falling behind inflation.

I’d rather go for a Stocks and Shares ISA  and consider holding shares such as these.

Britvic (LSE: BVIC) is a UK-based soft drinks manufacturer and distributor with well-known brands such as Robinsons, J2O, Tango, Fruit Shoot and Teisseire. I think the enterprise has a lot of defensive characteristics, meaning that incoming cash flow can be reliable, which is ideal for supporting a progressive dividend policy.

Over the past five years, the dividend is up by 41% and the share price has moved 34% higher. Right now, the dividend yield is running just above 3% and I reckon the share is a decent target for me to buy on dips and down-days with a holding period of at least five years in mind.

It’s not the bargain it appeared to be around a year ago, but I wouldn’t turn my back on the company on the grounds of over-valuation just yet. I’m keeping a close eye on Britvic.

AstraZeneca (LSE: AZN), the well-known FTSE 100 listed biopharmaceutical company, has a strong research and development operation, which leads to a pipeline of new products that it manufactures, markets and sells. I reckon drugs are fast-moving consumer goods with strong repeat-purchase credentials and loyal customers, which makes the company’s business defensive with reliable flows of incoming cash – ideal for servicing the dividend.

However, the much-reported problems with patent expiry have led to many of the firm’s best-sellers timing out of patent protection leading to an influx of generic competition from me-too drugs made by other suppliers. The result has been an erosion of revenues, profits and incoming cash flow, but AstraZeneca has held its dividend flat over the past five years while it develops new potential big-selling drugs for the future.

I think the rebuilt earnings that City analysts forecast could get the dividend moving up again over the next five years.

British American Tobacco (LSE: BATS), the FTSE 100 tobacco and next-generation products company, has seen its share price pummelled since the summer of 2017 and it is still almost 50% down from its peak. But City analysts following the firm predict healthy advances in annual earnings over the next couple of years.

I think fears about the future of the company’s business might have been over-expressed. Indeed, the valuation looks compelling to me with the price-to-earnings ratio for 2019 running close to 10 and the forward-looking dividend yield at just below seven.

The dividend is a little over 40% higher than it was five years ago and I reckon the firm’s business dealing in smoking-related fast-moving consumer goods has the potential to drive the dividend higher again over the next five years and beyond. BATS looks like a solid dividend ‘buy’ to me at the current valuation, but be sure to do your own research before buying any of the shares mentioned here.

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.

Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of and has recommended Britvic. The Motley Fool UK has recommended AstraZeneca. 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

A senior group of friends enjoying rowing on the River Derwent
Investing Articles

£500 to invest a month? Consider aiming to turn that into a £20,000 passive income like this!

With a regular monthly investment, it's possible to build a large and steady passive income for retirement. Royston Wild explains.

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Investing Articles

As retirement needs soar 60%, here’s how I’m building wealth with UK shares

A regular investment in UK shares and funds could help Brits create a large and lasting pension. Our writer Royston…

Read more »

Investing Articles

I’d buy Games Workshop shares before they reach the FTSE 100!

Games Workshop shares look likely to join the FTSE 100 soon. Here’s why I think investors should consider buying the…

Read more »

Businesswoman calculating finances in an office
Investing Articles

Could me buying this stock with a $2.5bn market-cap be like investing in Tesla in 2010?

Archer Aviation (NASDAQ:ACHR) stock's nearly doubled so far in November. Could this start-up be another Tesla in the making?

Read more »

Investing Articles

5,000 shares of this UK dividend stock could net me £1,700 a month in passive income

Our writer calculates the passive income he could earn from holding a significant number of shares in this powerful dividend-paying…

Read more »

Investing Articles

9.3%+ yields! 3 FTSE 100 dividend giants to consider buying

Our writer examines a trio of high-yield FTSE 100 shares and explains some of the opportunities and risks he sees…

Read more »

Investing Articles

As the Kingfisher share price drops on Budget fallout, should I buy?

The Kingfisher share price was on a strong 2024 run until the DIY group warned us of the possible effects…

Read more »

Investing Articles

2 passive income shares to consider for December 2024 onwards?

These are popular UK shares investors often buy for passive income from dividends, but are they actually good investments now?

Read more »