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Forget a Cash ISA! Here are 3 shares I’d buy for my Stocks and Shares ISA

With Cash ISA interest rates running around 1.5% or below, there’s a good chance that even compounding the money by leaving the interest in the account will leave your returns falling behind inflation.

I’d rather go for a Stocks and Shares ISA  and consider holding shares such as these.

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Britvic (LSE: BVIC) is a UK-based soft drinks manufacturer and distributor with well-known brands such as Robinsons, J2O, Tango, Fruit Shoot and Teisseire. I think the enterprise has a lot of defensive characteristics, meaning that incoming cash flow can be reliable, which is ideal for supporting a progressive dividend policy.

Over the past five years, the dividend is up by 41% and the share price has moved 34% higher. Right now, the dividend yield is running just above 3% and I reckon the share is a decent target for me to buy on dips and down-days with a holding period of at least five years in mind.

It’s not the bargain it appeared to be around a year ago, but I wouldn’t turn my back on the company on the grounds of over-valuation just yet. I’m keeping a close eye on Britvic.

AstraZeneca (LSE: AZN), the well-known FTSE 100 listed biopharmaceutical company, has a strong research and development operation, which leads to a pipeline of new products that it manufactures, markets and sells. I reckon drugs are fast-moving consumer goods with strong repeat-purchase credentials and loyal customers, which makes the company’s business defensive with reliable flows of incoming cash – ideal for servicing the dividend.

However, the much-reported problems with patent expiry have led to many of the firm’s best-sellers timing out of patent protection leading to an influx of generic competition from me-too drugs made by other suppliers. The result has been an erosion of revenues, profits and incoming cash flow, but AstraZeneca has held its dividend flat over the past five years while it develops new potential big-selling drugs for the future.

I think the rebuilt earnings that City analysts forecast could get the dividend moving up again over the next five years.

British American Tobacco (LSE: BATS), the FTSE 100 tobacco and next-generation products company, has seen its share price pummelled since the summer of 2017 and it is still almost 50% down from its peak. But City analysts following the firm predict healthy advances in annual earnings over the next couple of years.

I think fears about the future of the company’s business might have been over-expressed. Indeed, the valuation looks compelling to me with the price-to-earnings ratio for 2019 running close to 10 and the forward-looking dividend yield at just below seven.

The dividend is a little over 40% higher than it was five years ago and I reckon the firm’s business dealing in smoking-related fast-moving consumer goods has the potential to drive the dividend higher again over the next five years and beyond. BATS looks like a solid dividend ‘buy’ to me at the current valuation, but be sure to do your own research before buying any of the shares mentioned here.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of and has recommended Britvic. The Motley Fool UK has recommended AstraZeneca. 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.