Never mind panicking about an AI bubble, UK ISA investors are sticking to tried and trusted long-term winners.
During October, Legal & General (LSE: LGEN) has consistently made the top 10 among Stocks and Shares ISA providers. In fact, in the most recent data, it hit the number one spot at Interactive Investor.
I reckon the FTSE 100 insurer has a lot going for it as a long-term ISA investment to consider.
Long-term ISA
If there’s one sector that really drives home the long-term ideal, it has to be the insurance sector. The Legal & General share price hasn’t had the best five years on record, not by a long way — it’s well behind the FTSE 100. But over 20 years, it’s easily beaten the index, though with a fair bit of volatility.
Where Legal & General — and similar stocks like Aviva, also among the month’s top ISA buys — excels is in dividends. We’re looking at a forecast yield of 8.9% now. It’s one of the best in the Footsie.
Dividends are never guaranteed. And with a cyclical business like this a short-term cash shortage leading to a dividend cut is a danger. But the latest Dividend Dashboard from AJ Bell puts Legal & General among the four biggest FTSE 100 yielders without a cut in the past decade.
Investing in finance
Finance in general is still big among ISA investors. We do seem to like Lloyds Banking Group and Barclays this year, continuing in October. The recent car-loan case put aside uncertainty at Lloyds — and maybe helped confidence in the bank sector in general.
The reasons behind bank popularity are multiple. And valuation seems to be one of them. Forecasts for Lloyds and Barclays show their price-to-earnings (P/E) ratios falling as low as 7.7 and 6.6, respectively, by 2027. Who wants Tesla on a P/E of 350 when we can buy UK banks so much cheaper?
Diversify, diversify
I mostly like financial stocks myself, but we really do need diversification. And ISA investors have that sewn up as far as I can see. The popularity of BP has been a bit up and down over the past few years. But it seems we’re solidly behind it these days, with both it and Shell very common ISA choices all year.
Again, we’re looking at stocks with decades-long histories of bringing home the cash. BP’s expected dividend at 5.6% looks especially attractive — though Shell’s 3.7% is nothing to cry about.
Surprises
Are there any surprises for me? Actually, yes. I didn’t expect to see Empire Metals making the number four spot in Interactive Investor’s 20 October update. It’s a small-cap stock that’s rocketed since the summer — all about titanium, apparently.
Overall, I see a balanced mix of income and growth stocks — Rolls-Royce Holdings is still a winner. And a fair bit of cash is going into pooled assets like investment trusts too. It convinces me of one thing. The country’s Stocks and Shares ISA decisions are in good hands — our own hands.
