The prospects for UK shares continue to be uncertain over the near term. However, over the long run, indexes such as the FTSE 100 and FTSE 250 could deliver impressive returns relative to other mainstream assets.
As such, now could be the right time to buy a selection of high-quality businesses that have long-term growth potential. Here are two such businesses that could outperform their index peers to provide your ISA with capital growth and dividend returns in the coming years.
A dividend opportunity among UK shares
UK shares that offer dividend growth potential may be somewhat rarer after coronavirus. However, AstraZeneca (LSE: AZN) offers a dividend yield of around 2.6% at the present time, with its recent results suggesting it could produce a relatively fast pace of dividend growth.
For example, the company reported a 14% rise in sales and a 26% increase in its core earnings in the first half of the year. With it continuing to invest in its pipeline, and experiencing strong sales in emerging markets, it may deliver further growth in its profitability that enables it to pay a rising dividend over the coming years.
Furthermore, with the prospects for many FTSE 100 and FTSE 250 stocks currently being uncertain, the defensive characteristics of AstraZeneca may increase its appeal to rise-averse investors. As such, its investment prospects appear to be relatively high at the present time.
Investing in a green recovery
SSE (LSE: SSE) is another FTSE 100 company that could outperform other UK shares over the next decade. The business is focusing its capital on a low-carbon economy, with its £7.5bn capital expenditure plan over the next five years set to further enhance its presence within the renewables sector.
SSE also has a relatively robust dividend outlook. It currently yields around 6.5%, and has a plan to increase dividends per share by the same rate as inflation over the next three years. This suggests that it offers good value for money – especially when many other income shares have reduced their shareholder payouts in recent months.
As such, now could be the right time to buy a slice of the business. It could deliver an impressive total return over the next decade that enhances the value of your ISA.
Clearly, buying UK shares such as AstraZeneca or SSE may not lead to positive returns in the short run. Risks such as Brexit and coronavirus may weigh on investor sentiment in the coming months and cause the wider market to come under pressure.
However, their recent performances, dividend prospects and strategies suggest that they could have a positive impact on your ISA over the long run. Investing £2,000, or any other amount, in them could prove to be a profitable move in the coming years.
Peter Stephens owns shares of AstraZeneca and SSE. The Motley Fool UK has no position in any of the shares mentioned. 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.