2 stocks I’d add to an ISA in June for passive income

This Fool is looking for new additions to his ISA. Here, he explores two cheap stocks he thinks could be smart buys today.

| More on:

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.

I didn’t make the most of my ISA last year and I regret it. Therefore, this year I’ve vouched to try and max out the tax-free £20,000 limit that every UK investor is given to the best of my ability.

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.

I’m focusing on stocks that pay meaty dividend yields as I’m keen to start generating a passive income as early as possible in my investment journey.

If I had the cash, these are two stocks I’d consider picking up this month.


I’ve been keeping a close eye on Burberry (LSE: BRBY) in recent months. The stock’s performance over the last year has been woeful. During that time, it’s down 51.7%. For comparison, the FTSE 100 is up 10.8% across the same period.

But I think Burberry shares, now trading on a price-to-earnings (P/E) ratio of just 14.1, could be too cheap to ignore. That’s considerably lower than its long-term historical average of around 23.

The catalyst for its downfall is the multiple profit warnings that the firm has given. In its latest update, it revealed that earnings for 2023 fell by 40%. Going forward, I’d expect the business to continue to struggle as consumers feel the squeeze on their pockets.

But I’m bullish on the long-term outlook. Burberry is an iconic brand and I’d expect demand to pick up again as the cost-of-living crisis subsides.

With a flagging share price, the stock now yields 5.9%. Even during the struggles of 2008/09, the Burberry share price nosedived yet management maintained the dividend. That gives me hope that its payout won’t be cut despite the challenges it faces.

I’m not expecting a quick turnaround with Burberry. I think its recovery will take years. But while I patiently wait for its share price to recover, I’ll happily receive some extra cash along the way.


I already own shares in oil and gas behemoth BP (LSE: BP.), but I reckon now could be a chance for me to consider buying some more. Unlike Burberry, the stock has posted a strong performance in the last 12 months, rising 7.4%.

But even with that gain, I’d still be keen to pick up its shares. They have a P/E ratio of 11.7. That looks like fair value to me. What’s more, to go with that valuation, the stock boasts a 4.7% yield.

What I further like about BP is the plans management has to keep giving back to shareholders over the coming years. By 2025, it has the ambitious aim of buying back up to $14bn worth of shares. It’s on track to buy back $3.5bn in the first half of this year.

There are a few risks with BP. Firstly, it’s a cyclical stock. What’s more, the energy transition remains a constant threat as more and more emphasis continues to be placed on moving to a greener future.

But, according to experts, oil demand will keep rising until the end of the decade. There’s also uncertainty surrounding the UN’s initial 2050 net zero target. There is now talk that policy-makers may push it back.

The BP share price has dipped 6.4% in the last month. That means June could be a chance to increase my holdings. If I have the cash, that’s what I’ll be doing.

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.

Charlie Keough has positions in Bp P.l.c. The Motley Fool UK has recommended Burberry Group 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

Investing Articles

What kind of return could I expect by investing £100 monthly in a Stocks and Shares ISA?

Using a Stocks and Shares ISA to avoid capital gains tax could grow a £100 monthly investment into a second…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Can strong operational momentum keep the Informa share price rising?

FTSE 100 company Informa has been performing well, but this may be just the beginning of a multi-year trend for…

Read more »

Market Movers

What’s going on with the Britvic share price?

Jon Smith flags up why Britvic's share price is surging on Friday, but believes that the company is in a…

Read more »

Cheerful young businesspeople with laptop working in office
Dividend Shares

2 super-cheap passive income shares I’m eyeing up right now

Jon Smith discusses two of his favourite passive income shares in the banking and property sectors, both featuring yields above…

Read more »

Chalkboard representation of risk versus reward on a pair of scales
Investing Articles

Up 37.5% in just 12 months, I think this is one of the FTSE 100’s best investments

Our author says this FTSE 100 company is likely to keep on capitalising on the AI and data boom. But…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

This UK share just spiked 15% on bid news. Can we bag a quick profit?

UK share prices are having a good 2024, so far, and this one's already up 39%. Two takeover bids in…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

I’m ‘blowing a raspberry’ at Raspberry Pi shares. Here’s why

Some early investors have made great profits from Raspberry Pi shares. But our writer's questioning whether the 'easy money' has…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Dividend Shares

Here are brokers’ new price targets for Legal & General and National Grid shares

City analysts are generally very positive on National Grid shares. But they're not quite as bullish on the Legal &…

Read more »