3 Shares For Your 2015 ISA: BP plc, ITV plc And Rio Tinto plc

Here’s why BP plc (LON: BP), ITV plc (LON: ITV) And Rio Tinto plc (LON: RIO) could be good for your 2015 ISA.

| 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.

It’s ISA time again, and when 6 April comes around we’ll have a shiny new allowance of £15,240 to use up — and all profits from ISA investments are free of tax. But what should we buy? Here are three ideas:

BP

Bod Dudley, the boss of BP (LSE: BP)(NYSE: BP.US), has said he expects the current period of cheap oil to go on for some time, perhaps even as long as two or three years, so does that suggest we should steer clear of oil companies? Quite the opposite, I’d say. What we should be doing is using the opportunity to identify the strong companies that are likely to do well in the long run, and think about buying them while share prices are down.

BP is one of them, and though it has shelved some higher-cost exploration and development and is engaged in cost-cutting measures, its shares look good value at 417p. There are still earnings rises forecast, and dividends are expected to yield 6.2% — and that would generate £945 in cash on a full ISA, compared to around £240 interest from the very best cash ISA.

BP’s dividends won’t be strongly covered, but the firm will be very keen to keep the payments going after their strong post-disaster recovery.

ITV

ITV (LSE: ITV) has put in a great set of earnings rises since a crunch point in 2009 during the recession, with EPS more than doubling in four years to the 13.8p recorded in 2014. There’s relatively modest growth forecast for this year and next, at 8-9%, and dividend yields are around 2.5%.

But even after a five-year price rise of 363% to 252p, the shares are still on reasonable P/E valuations for 2015 and 2016 of 16.7 and 15.4. That’s a bit above average, but ITV’s long-term prospects look good, with chief executive Adam Crozier saying at 2014 full-year results time that “For 2015 we’re confident of further good revenue growth in all parts of ITV” and committing the company to “grow the full year ordinary dividend by at least 20% per annum for three years to 2016“.

Rio Tinto

What about Rio Tinto (LSE: RIO)(NYSE: RIO.US)? Well, it’s a miner that’s seen its share price lose 23% over five years due to falling metals and minerals prices. But the company is still selling all the iron ore it can unearth, producing 11% more in 2014 than in 2013 and shipping 17% more. And Rio enjoys lower production costs than some smaller miners, which should set it up nicely for a longer term recovery.

At 2,834p the shares are on a forward P/E of 12.2 this year, dropping to 10.4 on 2016 forecasts, with well-covered dividend yields of 5.4% and 5.7% on the cards. Barring a Chinese economic crash, I really can’t see Rio Tinto shares getting much cheaper than this, and I see Rio as a firm “buy and hold” candidate.

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.

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »