3 Shares For Your 2015 ISA: SSE PLC, British American Tobacco plc And Anglo American plc

What shares should you put into your brand new 2015 ISA allowance? You can shelter up to £15,240 from tax starting 6 April (on top of the £15,000 allowance from the year just ending), and it can make a lot of sense to build a diversified portfolio. Here are three quite different stocks to consider:


Every ISA should have a handful of good dividend stocks, and they don’t come much better than utilities providers, which are able to pay out the lion’s share of their annual earnings. SSE (LSE: SSE) is in that happy band, with a yield of 6.1% forecast for the year ending March this year — and by utilities standards, it should be reasonably well covered. SSE also operates a scrip dividend scheme, so you don’t even have to take cash and shoulder the dealing costs of reinvesting it. 

To put it into perspective, it’s the equivalent of a cash return of £930 on a whole ISA allowance, compared to the mere £240 you’d get from the very best cash ISA — and would you really go for cash when it’s so easily beaten by shares?

Will SSE cut its dividend the way Centrica did recently? Judging by its January update, no — the firm said it “expects to report an increase in the full-year dividend for 2014/15 that will at least be equal to RPI inflation” and plans to continue to beat inflation for 2015/16 too.

British American Tobacco

Ethical issues are for you to decide, but purely on financial grounds I like British American Tobacco (LSE: BATS)(NYSE: BTI.US). Although actual cigarette volumes are falling and have been for some years, the great bulk of those sold are at the lower-margin end of the business, and there’s still plenty of scope for upselling as developing world incomes continue to grow.

In 2014, British American enjoyed a 5.8% rise in sales of its Global Drive Brands, which include Dunhill, Rothmans and Pall Mall, and continued its policy of lifting its dividend in real terms.

After a 12-month rise of 16% to 3,695p, the shares are on a forward P/E of 17.7 for 2015, dropping to 16.4 a year later. With dividends set to yield more than 4%, that doesn’t look expensive.

Anglo American

As a recovery candidate, miner Anglo American (LSE: AAL) has to be worth a look. Underlying earnings fell 17% in 2014, even though production figures were up — but prices are still depressed. There’s a further EPS fall forecast for this year before we can expect a return to growth, but despite that a 12-month fall in the shares of 28% to 1,064p makes them look cheap to me.

Unless it’s cut, which seems unlikely at this stage, the mooted dividend would yield 5.3% this year. Anglo American deserves consideration.

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