With the New Year just around the corner, here’s how I’d spend £1K on UK shares if I had the cash ready to go!
Recapping 2023
Macroeconomic volatility as well as geopolitical tensions have put many global markets in a choke hold. Uncertainty around what may happen next has hampered many stocks. By-products of these issues include higher energy and food costs, as well as a cost-of-living crisis. The housing market dipping has also sparked fears of a recession.
When such events occur, it can create a environment of panic buying and selling, in my opinion. Two key lessons I’ve learnt are to remain calm and rational about my investments and what I’m looking to achieve. The second is from the great Warren Buffett, who once advised investors “..to be greedy when others are fearful”.
We don’t really know what’s going to happen next but it’s still important for me to plan ahead and look to capitalise on market volatility to bolster my holdings.
How I’d spend my first £1K in 2024
I’m looking to achieve three things. These are:
- Boost my passive income stream through dividend-paying UK shares
- Pick up established, industry-leading stocks at a cheaper price thanks to volatility
- Look for small-cap stocks that could soar in the longer term
My passive income pick is Land Securities Group, which is the largest commercial property development company in the UK.
Landsec – as it is best known – is set up as a real estate investment trust (REIT). This means it makes income from renting out different types of property and, more importantly for me, it must return 90% of profits to shareholders. This makes it an attractive choice for me.
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The risk with Landsec shares is that the current economic turbulence is impacting growth as well as potentially rent collection. Higher rates mean higher borrowing costs as well as the potential for increased defaults. This could hurt the payouts I’m looking for.
However, Landsec’s dividend yield of 6% and attractive valuation on a price-to-earnings ratio of 12 are unmissable, in my eyes.
Next, FTSE 100 consumer goods giant Unilever is currently trading at levels not seen for a while. Soaring costs and consumers looking for non-branded essentials have pulled the shares back.
However, for me, Unilever’s mammoth footprint, experience, and vast array of brands help me feel the business is just in a temporary malaise and the shares will soar once more. A current P/E ratio of 13 is very attractive, as is its solid passive income opportunity.
Last but not least, European Metal Holdings is a small-cap mining stock that is looking to capitalise on the lithium boom. Lithium is a key component for ion batteries, which are essential in electric vehicles (EVs). The adoption of EVs is only set to soar in the coming years.
As with any mining stock, difficulties exploring or operational issues could set the business back. However, at just 30p a share, I’d be willing to open a small position in European Metals. A recent update detailing positive progress in its flagship mine has me excited for its growth prospects.
