How I’d invest £1,000 in a Stocks and Shares ISA in May

Stephen Wright is looking for opportunities to add to his Stocks and Shares ISA this month. Two UK stocks are on his radar as worth considering.

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Investing regularly in a Stocks and Shares ISA can be a great way of building wealth or earning passive income. And it can be surprising what a £1,000 monthly investment can become over time.

Someone who achieves a 6% annual return and invests £1,000 per month for 10 years could have a portfolio worth  £164,000. But where should investors look for stocks to buy this month?

Admiral

News that inflation is starting to come down has been positive for FTSE 100 insurance company Admiral (LSE:ADM). In the UK, the rate of price increases is at its lowest level since September 2021.

The downside to this is it increases the chances of interest rates coming down. If this happens, the business is unlikely to be able to generate such a good return on the premiums it collects. 

But Admiral’s big strength is in its underwriting. The company’s use of telematics has allowed it to price its contracts more effectively than its rivals, leading to better underwriting margins. 

This puts the firm in a very strong position. Drivers have to buy insurance from somewhere and a shares in a business that has an advantage in this industry could be a good investment.

Primary Health Properties

FTSE 250 real estate investment trust Primary Health Properties (LSE:PHP) is a very different type of business. But I think it’s another example of a company that has decent long-term prospects. 

The company is a real estate investment trust (REIT) that leases a portfolio of GP surgeries. Occupancy levels are consistently high and with most of the rent coming from the NHS, the risk of rent defaults is low. 

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The business has a lot of debt and this might deter investors. I can see why – the firm will need to figure out what to do about this if interest rates are still high when the time comes to refinance.

As I see it, the worst-case scenario for investors is that the outstanding share count doubles and the dividend halves. Yet that would still be a yield of over 3%, which probably isn’t a disaster.

Which one to choose?

Admiral and Primary Health Properties are different types of business. As such, which one I’d choose to invest in would depend on my ambitions. 

If I were looking to build wealth, I’d look for a company that can generate cash and redeploy it at decent rates of return. That’s Admiral. 

For passive income, I’d choose Primary Health Properties. Growth isn’t likely to spectacular, but the 7% dividend yield means the stock could be a fine investment even with minimal growth.

Ultimately, which stock I’d opt for would depend on my personal circumstances. But whatever I was aiming to do, I think I could find somewhere to invest £1,000 in a good opportunity this month.

Finding stocks to buy

When it comes to investing, the most important thing is to find a company that has good long-term prospects. And I think both Admiral and Primary Health Properties meet this condition.

From there, it’s about buying the stock and being patient while waiting for returns to develop. That might take time, but quality companies tend to turn out well in the end.

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.

Stephen Wright has positions in Primary Health Properties Plc. The Motley Fool UK has recommended Admiral Group Plc and Primary Health Properties 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.

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