Time for some last-minute ISA bargains in the stock market?

Stephen Wright thinks real estate and banks are sectors to look at with just hours left to add cash to an ISA from the 2022/23 contribution limit.

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.

Calendar showing the date of 5th April on desk in a house

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.

Today is the last day for investors to use their ISA contribution limit for the tax year that’s just ending. Tomorrow, a new financial year brings a new £20,000 limit.

I’ve used my full allowance for this year. But if I hadn’t, here’s where I’d be looking for some last-minute shares to buy.

Real Estate

Rising interest rates in the UK and the US have been driving down property prices. More expensive debt has meant that funding to buy buildings has been harder to come by. 

As a result, demand in the property sector has decreased, causing prices to fall. And a number of tax-efficient Real Estate Investment Trusts (REITs) have seen their share prices fall significantly.

Two in particular stand out to me as stocks to buy on the last day before the new ISA allowance. In the UK, Warehouse REIT looks attractive to me and Realty Income in the US is on my radar.

As its name suggests, Warehouse REIT focuses on industrial distribution centres. The risk here is that vacancy rates are rising as companies that began renting space during the pandemic start to struggle. 

I expect this stock to do well, though. There are some natural advantages for warehouse owners in that the buildings are expensive to put up, location matters, and space in prime locations is limited.

Realty Income is a retail-focused REIT. It basically has the opposite characteristics of Warehouse REIT – it has strong tenants that are unlikely to go under, but its buildings are largely a commodity.

That means that the risks and rewards are exactly the opposite way around to what they are for Warehouse REIT. The business lacks pricing power, but it’s unlikely to have to deal with unpaid rent.

Both stocks have a dividend yield of just over 5% and I’d be happy buying either at today’s prices. Warehouse REIT probably offers better growth, but Realty Income is more stable.

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.

Banks

The other obvious sector to look at right now is financials. There’s a lot of pessimism around the banking sector at the moment and that makes shares in banks interesting to me.

NatWest Group is the stock that stands out to me in the UK. It has one of the highest shares of retail deposits, as well as a significant base among younger savers with its product range and offerings.

The risk with the company is that it’s still mostly owned by the UK government. That has the potential to limit its ability to operate independently as a profit-seeking entity if needed.

Nonetheless, were I looking for a stock to buy I’d consider NatWest. The company does far more in the way of share repurchases than other UK banks, giving it a clear advantage, in my eyes.

I think there are a number of interesting US banks. But one that has been increasingly appearing on my radar is US Bancorp

The company is pretty much the biggest of the regional banks. There’s probably a greater risk of tighter regulation cutting into profits than there is with JP Morgan, but the shares are much cheaper.

I’d see either as a decent stock to buy as the financial year comes to an end. NatWest looks like the more stable offering, US Bancorp with the greater reward potential.

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.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Stephen Wright has positions in Realty Income. The Motley Fool UK has recommended Lloyds Banking Group Plc and Warehouse REIT 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

Growth Shares

Growth stock YouGov just fell 46%. Time to buy?

YouGov’s share price just fell from 820p to 440p after a poor trading update. Is now a good time to…

Read more »

Investing Articles

2 mouthwatering FTSE growth stocks I’d buy and hold for 10 years

Growth stocks purchased today could be the gateway to many years of capital growth and returns. Here are two picks…

Read more »

Investing Articles

Can the IAG share price really be as dirt cheap as it looks?

While most shares have recovered since the Covid days, the IAG share price is staying stuck to rock bottom. Surely…

Read more »

Investing Articles

BAE Systems shares are flying! Have I missed the boat?

Sumayya Mansoor looks into whether or not BAE Systems shares are still a good buy for her portfolio after the…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

1 heavyweight FTSE 100 share I’d buy as London retakes its crown

Some Footsie firms are extremely large, but that doesn't mean they couldn't get even bigger. Here's one such FTSE 100…

Read more »

Investing Articles

I’d buy 5,127 National Grid shares to generate £250 of monthly passive income

With a dividend yield of 6.5%, Muhammad Cheema takes a look at how National Grid shares can generate a healthy…

Read more »

Investing Articles

The FTSE 100’s newest member looks like a no-brainer to me!

This Fool explains why she sees the newest member of the FTSE 100 as a great opportunity after its recent…

Read more »

Investing Articles

Empty Stocks and Shares ISA? Here’s how I’d start earning a second income from scratch

Like the thought of earning extra cash tax free? Our writer explains what he'd do to begin earning passive income…

Read more »