There are now 5,000 ISA millionaires! See the surprising UK dividend shares they’re buying

The number of ISA millionaires is growing all the time and guess what? They’re really into blue-chip dividend shares listed on the FTSE 100 index, says Harvey Jones.

| More on:

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.

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.

There are now an impressive 5,000 ISA millionaires and most of them have built their wealth by investing in… yes, that’s right, FTSE 100 dividend shares.

Today’s updated figure comes courtesy of smart money app Plum, following a Freedom of Information request. That’s up from 4,000 at last count, an increase of 25% in a year

The average ISA millionaire now has a tax-free pot of £1.35m and some are doing even better. The top 25 Stocks and Shares ISA investors hold an eye-watering £8,880,000 on average.

Should you invest £1,000 in BT right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BT made the list?

See the 6 stocks

Who wants to be a Stocks and Shares ISA millionaire?

Plum’s Rajan Lakhani said ISAs don’t just offer tax advantages but “flexibility and liquidity” too. “You can crystallise your wealth whenever you choose and regardless of age, unlike, for example, pension holdings or buy-to-let properties.”

The new research doesn’t show which stocks these wealthy private individuals hold, but luckily investment platform AJ Bell produced its own research earlier this year.

Its report will come as a shock to anyone (me included) who assumed they’d grown wealthy by investing in US tech giants culled from the S&P500.

While the likes of Nvidia, Microsoft and Apple do feature in their portfolios, AJ Bell said that “far more have large-cap dividend-paying stocks from the UK market than overseas-listed stocks”.

It also made it clear what attracted ISA millionaires to UK blue-chips: while foreign shares “pay little or no income to shareholders”, UK shares do.

FTSE 100 oil giant Shell (LSE: SHEL) is their number one holding. Now there’s a business that has been doing the same thing for decades.

Yet Shell has been through a tough time lately. Like every oil producer, revenues and profits bob up and down in line with commodity prices. With the oil price sliding to $72, the Shell share price is sliding too. It’s down 14.53% over the last three months. Over the year, it’s fallen 4.42%.

Created with Highcharts 11.4.3Shell Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Shell quickly resumed its dividend after dropping it in the pandemic and today offers a modest trailing yield of 4.07%. I’d expect that to return to 5% or 6% over time. The board has rewarded investors with plenty of share buybacks too.

Shell is a long-term dividend-growth star

The oil price could fall further as Chinese demand wilts and US President-elect Donald Trump ramps up fossil fuel production. I doubt ISA millionaires are worried though.

Experience will have shown them that investing is cyclical. The last thing they would do is sell Shell at the bottom of that cycle. While Shell still has to navigate the green transition, I would expect it to deliver a steady stream of income and growth over the years.

Lloyds Banking Group is the second most popular stock among ISA millionaires, according to AJ Bell. It’s followed by pharmaceutical group GSK, oil giant BP, insurer Aviva, utility National Grid, consumer healthcare company Haleon, insurer Legal & General, HSBC Holdings and spirits maker Diageo.

AJ Bell said that ISA millionaires show a preference for solid, established businesses that have been doing the same thing for decades: “There are no speculative, blue-sky companies in their portfolios that have a bright idea but do not generate revenue.”

Personally, I hold GSK, BP, L&G and Diageo and while I’m nowhere near ISA millionaire status, it’s nice to know I’m in good company.

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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.

Harvey Jones has positions in Bp P.l.c., Diageo Plc, GSK, Legal & General Group Plc, and Lloyds Banking Group Plc. The Motley Fool UK has recommended Apple, Diageo Plc, GSK, HSBC Holdings, Haleon Plc, Lloyds Banking Group Plc, Microsoft, National Grid Plc, and Nvidia. 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.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Dividend investors! Here’s what Warren Buffett says builds wealth in the stock market

Reinvesting dividends at yields of 8% or higher looks like a good way of building wealth. But Warren Buffett has…

Read more »

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

Here’s my Stocks and Shares ISA plan for 2025-26

A Stocks and Shares ISA helps investors avoid taxes on dividends and capital gains. And Stephen Wright has a plan…

Read more »

Dividend Shares

Of the 20 highest-yielding FTSE 100 stocks, this is my top pick

This FTSE 100 stock currently offers a yield of 6.4%. But Edward Sheldon believes it’s capable of providing share price…

Read more »

Investing Articles

Could Tesla’s share price jump over the next 12 months? These analysts think so!

Tesla's share price has fallen by almost a third since 1 January. But optimism is high that Elon Musk's company…

Read more »

Investing Articles

I asked ChatGPT where the FTSE 100 will be in 6 months: here’s what it said…

Let’s be realistic, ChatGPT can’t predict the future. But it did do a good job of compiling data from brokerages…

Read more »

Investing Articles

Could the Rolls-Royce share price hit £10?

The Rolls-Royce share price has taken most analysts by surprise with almost everything going right for the British engineering giant.

Read more »

Investing Articles

4 REITs Fools own for passive income

REITs often have higher-than-average dividend yields compared to other stocks, making them a solid choice to consider for passive income…

Read more »

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »