Given my economic objection to — and practical dislike of — high taxes, I use my full £20,000 Stocks and Shares ISA allowance with a near-religious fervour every year.
This is not only exempt from income and capital gains tax but also has no age-related restrictions on withdrawals. So, unlike private pensions, I could withdraw this ISA money anytime and in any amount with no tax penalties.
But what sort of returns am I targeting in my latest Stock and Shares ISA?
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A better return than the ‘risk-free rate’?
There is more risk involved in share investment than there is in investing in the UK 10-year government bond, known as the ‘risk-free rate’.
And currently, it delivers an annual yield of 5.1%, although the interest rate (coupon) on bonds — just like with shares — can go up and down over time.
Nevertheless, at the current rate with the returns compounded (reinvested into the bonds), I could make £13,270 after 10 years. And this would rise to £72,065 after 30 years. And at the end of that time, I could have a monthly income from the interest of around £306.
Incidentally, gilts can be included in a Stock and Shares ISA. So, it is a straight comparison of risk and reward.
What are the FTSE options here?
Happily, several shares in the FTSE 100 and FTSE 250 deliver much higher annual returns than this. One is the UK’s only integrated multi-utility provider, Telecom Plus (LSE: TEP).
It is best known for its Utility Warehouse brand, but what really sets it apart is its bundled‑services model. Instead of selling energy separately like traditional suppliers, it wraps broadband, mobile, insurance and home energy into a single package. That keeps customers loyal and cash flows steady.
A risk here is any slowdown in customer acquisition or partner recruitment that could weaken the growth model. Another would be rising wholesale energy or telecom costs that could squeeze its margins.
However, the company’s mix of essential, everyday services creates unusually strong recurring earnings. Indeed, analysts forecast these will rise by 9.8% a year on average over the medium term, at minimum. And this is exactly the kind of foundation that supports a dependable and rising dividend profile.
How much in dividends over time?
Telecom Plus’ dividend yield is forecast to hit 9.4% next year, 10% in 2028, and 10.6% in 2029.
So, a £20,000 holding in the firm on the projected 10.6% as an average (and including ‘dividend compounding’) could make £32,035 after 10 years. And after 30 years on the same basis, this dividend gain could rise to £332,226.
By that point, the holding’s total value could be £352,226. And that would deliver a monthly passive income (from dividends) of £3,111!
My investment view
My holdings in other telecoms and energy firms (BT, BP, Shell, Harbour Energy) preclude me from adding another in the same sector. To do so would unsettle my portfolio’s risk/reward balance.
Instead, I have my eye on other high-yielding stocks that also look cheap to me at their current price.
However, for investors considering it without this problem, I think Telecom Plus offers the rare mix of stability, growth and income that long‑term ISA investors often struggle to find.
