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3 Shares For Your 2015 ISA: BP plc, ITV plc And Rio Tinto plc

It’s ISA time again, and when 6 April comes around we’ll have a shiny new allowance of £15,240 to use up — and all profits from ISA investments are free of tax. But what should we buy? Here are three ideas:

BP

Bod Dudley, the boss of BP (LSE: BP)(NYSE: BP.US), has said he expects the current period of cheap oil to go on for some time, perhaps even as long as two or three years, so does that suggest we should steer clear of oil companies? Quite the opposite, I’d say. What we should be doing is using the opportunity to identify the strong companies that are likely to do well in the long run, and think about buying them while share prices are down.

BP is one of them, and though it has shelved some higher-cost exploration and development and is engaged in cost-cutting measures, its shares look good value at 417p. There are still earnings rises forecast, and dividends are expected to yield 6.2% — and that would generate £945 in cash on a full ISA, compared to around £240 interest from the very best cash ISA.

BP’s dividends won’t be strongly covered, but the firm will be very keen to keep the payments going after their strong post-disaster recovery.

ITV

ITV (LSE: ITV) has put in a great set of earnings rises since a crunch point in 2009 during the recession, with EPS more than doubling in four years to the 13.8p recorded in 2014. There’s relatively modest growth forecast for this year and next, at 8-9%, and dividend yields are around 2.5%.

But even after a five-year price rise of 363% to 252p, the shares are still on reasonable P/E valuations for 2015 and 2016 of 16.7 and 15.4. That’s a bit above average, but ITV’s long-term prospects look good, with chief executive Adam Crozier saying at 2014 full-year results time that “For 2015 we’re confident of further good revenue growth in all parts of ITV” and committing the company to “grow the full year ordinary dividend by at least 20% per annum for three years to 2016“.

Rio Tinto

What about Rio Tinto (LSE: RIO)(NYSE: RIO.US)? Well, it’s a miner that’s seen its share price lose 23% over five years due to falling metals and minerals prices. But the company is still selling all the iron ore it can unearth, producing 11% more in 2014 than in 2013 and shipping 17% more. And Rio enjoys lower production costs than some smaller miners, which should set it up nicely for a longer term recovery.

At 2,834p the shares are on a forward P/E of 12.2 this year, dropping to 10.4 on 2016 forecasts, with well-covered dividend yields of 5.4% and 5.7% on the cards. Barring a Chinese economic crash, I really can’t see Rio Tinto shares getting much cheaper than this, and I see Rio as a firm “buy and hold” candidate.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.