We’re into a new Stocks and Shares ISA year. And we have a new allowance of up to £20,000 to invest.
So however much cash do we have free to invest, and what should we buy with it? I’ve had a look around the most popular picks so far in 2023 to get some ideas.
When it comes to individual stocks, it looks like there’s a big shift to financials this year. Insurers Legal & General and Aviva are up there in a few top 10 lists. And Lloyds Banking Group and Barclays are there with them.
Dividend focus
Going by the latest Dividend Dashboard from AJ Bell, financial stocks should lead the table of dividend rises this year. That’s on the back of earnings growth forecasts, and after the big miners fell down the dividend list.
In fact, it looks like Stocks and Shares ISA investors are keen on dividends in general. National Grid is a top pick year after year, and looks set to yield 4.5% this year.
Oil giant Shell is a common choice too. Even though oil is back down from last year’s peak prices, we’re still looking at a 4% dividend yield this year.
Growth too
There’s one notable growth stock in this year’s lists, Tesla. The US electric car maker’s stock has slid in the past couple of years, so people see a bargain now.
We’ve seen a general US growth stock slump, in fact. And it spills over into the list of most popular investment trusts among ISA holders.
Scottish Mortgage Investment Trust has stormed up the ISA charts this year. It holds Tesla, but Moderna, ASML, NVIDIA, and even SpaceX are also in its top 10 holdings.
Scottish Mortgage looks cheap to me after a big fall. And on top of the drop in assets, the shares are on discount of more than 20% now.
Conservative trust
The ISA favourites list also includes the more conservative City of London Investment Trust. And this one is dull by comparison. It holds BP, BAE Systems, Diageo, Unilever… yawn.
But those holdings have led to the trust raising its dividend every year for 56 years in a row. And it’s joint top of the list of Dividend Heroes maintained by the Association of Investment Companies.
How can this guide us with our Stocks and Shares ISAs in 2023?
Start the search
Well, I wouldn’t just buy the current favourites. That might not give me much balance, and I want a good level of diversification. But it does give us a set of options that we can use to start our own search.
And there are many other great stocks out there. They just don’t quite make it on to the most popular lists right now.
I think it also gives us a bit of encouragement. I’m sure a lot of use could use that if we might hesitate a bit to get started.
But, most of all, it reminds me that the tough economy is just a short-term thing. And the long-term ISA culture in the UK is thriving.
