There are more than 2,000 people who have become millionaires through a Stocks and Shares ISA. I am using their success to guide my thoughts as I find a tax-free haven for my investments.
In looking at the foundations of millionaires’ portfolios, analysis by AJ Bell shows 10 shares are the most popular.
Shell
It isn’t part of my portfolio, yet, but there are clear signs that Shell could be a great long-term investment. Earnings are strong and analysts predict dividends will grow. There is risk because of its exposure to fossil fuels, but it is investing in renewables.
Lloyds Banking Group
Amid rough times for global banks, Lloyds Banking Group shares look good value to me. ISA millionaires may have taken some short-term losses, but I think now is the time to buy. Last year, net income was up 14% and pre-tax profits stable despite a difficult market. The dividend also jumped 20%.
BP
I think BP shares provide a great lesson in long-term investment strategies. While the short-term share price graph looks volatile, the long-term trend shows growth. Like Shell, fossil fuels are a risk, but it is making big in-roads into renewables. A 4% dividend yield helps investors.
Scottish Mortgage Investment Trust
I own shares in Scottish Mortgage Investment Trust, so I know the benefits of its long-term investment strategy. I also know the pain of the recent share price fall, which has plummeted from £15 to less than £7. However, as a long-term investor, the value of my shares is still up 50% in five years.
Aviva
For investors, the best thing about Aviva shares is the dividend yield, currently more than 7%. Other than that, the share price is where it was decades ago. Whether it’s a favourite of ISA millionaires or not, this isn’t one for me.
GSK
GSK seems to have a healthy future with its renewed focus on pharmaceuticals, while Haleon takes on consumer healthcare. City analysts predict dividend returns of more than 4% for the next two years and I expect the share price to rise, so I am holding onto my stake.
Rio Tinto
I sold my Rio Tinto investment at just the right time when I questioned whether it could continue to return long-term share growth. Since then, the shares are down substantially. A recent cyber-attack is also a concern.
HSBC
It may be a good time to buy stalwarts such as HSBC. Their share price has suffered from others’ misfortune, despite adjusted profits and revenues being up last year.
Diageo
If it’s good enough for Warren Buffett, it’s good enough for me. Diageo is one of my priority buys before the ISA deadline. The shares are up 50% in five years and there is a dependable, if modest dividend.
National Grid
National Grid has been a solid performer in my portfolio for years and its latest results show that is likely to continue. With operating profit up 44% and a commitment to increasing the dividend so it delivers a steady yield of around 5%, it’s my long-term star performer. The key risk is whether it will be nationalised under a new government.
