Hindsight is always 20/20, but one of my portfolio moves has turned out to be a mistake that I could have avoided. The good news is that I think I can avoid a repeat in 2026.

Selling too soon

The mistake was selling my Citigroup (NYSE:C) shares. Exiting investments too soon has been an ongoing weakness in my investing and it’s one I’ve been working to get better at.

It doesn’t matter how good my investment ideas are, I’m not going to benefit if I sell too soon. It’s a bit like Noah building the ark but selling it to someone else just as it started raining!

Anyway, back to Citigroup. Jane Fraser’s plan to simplify the company by selling its operations in countries where it can’t establish a meaningful presence has been a very good one.

As a result, the stock trades at a higher price-to-book (P/B) ratio (which I predicted) and the company is buying back shares (which I also predicted). But none of that is much use to me.

My investment in Citigroup wasn’t a total disaster, by any means. I made a solid enough profit, but I sold my entire stake at around $85 in June and the stock is now trading at $111.

That’s a 30% gain in six months I missed out on. And while I sold because the stock had reached my estimate of its intrinsic value, it’s fair to say I made a mistake in moving on.

Lesson learned

Fast forward to today and I find myself in a similar position with a different stock. The Games Workshop (LSE:GAW) share price has doubled since I started buying shares in the company.

As a result, the price-to-earnings (P/E) ratio has gone up and the dividend yield has gone down. And I think buying the stock today is a much less attractive proposition as a result. 

The pre-2026 version of me might have sold my shares to take advantage of some more obvious-looking bargains. But the effect of selling too early some of my ISA holdings this year is still very much front of mind.

In some ways, it’s easier with Games Workshop. It’s a company that I think has strong long-term growth prospects, rather than an underperforming firm with a lot of potential. 

That’s not to say the stock is guaranteed to do well in 2026. Despite strong revenue growth in its core operations, the effects of inflation and US tariffs are starting to show up on margins. 

This is a risk going forward. But while I’m not adding to my investment at today’s prices, the firm’s strong intellectual property is enough to convince me not to sell. 

Warren Buffett

Warren Buffett once said that the stock market is a device for transferring money from the patient to the impatient. That was certainly the case for my Citigroup investment.

Fortunately for me, it shouldn’t be that difficult to do better going forward. And that’s what I’ll be aiming to do with my Stocks and Shares ISA in 2026.

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The other half is working out how to hold onto the cash they return to shareholders. And there are some things I make sure I do to maximise the income I get from my investments.

Citigroup

One of the largest investments in my Stocks and Shares ISA is Citigroup (NYSE:C). The firm’s going through a lengthy restructuring process, but I’m optimistic about the long-term outlook. 

The US bank’s been divesting some of its global consumer operations where it doesn’t have the scale to compete. I expect this to result in a more efficient bank with some unique strengths.

The obvious source of uncertainty is the highly regulated nature of the banking industry. Citigroup‘s found itself on the wrong side of this in the past and it remains an ongoing risk.

I started buying the stock a couple of years ago and since then, the share price has climbed around 40%. That’s a big reason why it’s one of my largest investments.

When I first bought it, the dividend yield was just over 5%. But a rising share price has cut it back down to 3.1%. 

From a passive income perspective though, it’s worth noting the dividend has proved durable. Throughout its restructuring, Citigroup’s maintained its quarterly shareholder distributions. 

Taxes

Unfortunately, not all the cash the firm sends out reaches me. This is because distributions from US companies are subject to a withholding tax for UK investors. 

Holding my Citigroup shares in a Stocks and Shares ISA means my returns aren’t eligible for dividend tax. But the ISA does nothing to help me get away from the withholding tax. 

The standard rate is 30% – which is a lot – but a W-8BEN form brings this down to 15%. And in the context of a long-term investment such as mine, that can make quite a difference. 

With my Citigroup shares, it’s the difference between getting back 2.64% of my stake each year, rather than 2.18%. This doesn’t sound like much, but it can be significant over the long term.

Reinvesting at 2.18% for 30 years means I should eventually get 4.07% of my initial investment back each year. Doing the same thing at 2.64% however, leads to a 5.6% annual return.

The difference doesn’t sound like much. But the W-8BEN form could ultimately mean I get back 38% more passive income each year from my Citigroup investment.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Maximising returns

Whether it’s growth or passive income, the effect of buying the right stocks can be undone if investors can’t hang on to their returns. And I think this is extremely important. 

Sometimes, taxes are inevitable. But there are things investors can do to limit the effect of these on their passive income and this can make a big difference over time.

One of these is completing a W-8BEN form. It’s a key part of how I aim to maximise my dividend income from Citigroup, as well as the other US stocks I own.

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It’s not easy to do, but the four largest investments in my Stocks and Shares ISA are all ahead of the average as 2024 draws to a close. And that gives me plenty to think about.

Shares I own

The largest stock in my portfolio is Citigroup (NYSE:C). The share price has been climbing as investors anticipate lighter banking regulations as a result of the US election outcome. 

Games Workshop‘s my largest UK stock. Despite making a discretionary product in a difficult environment, sales have been growing strongly and the shares have responded accordingly.

Third is Amazon, which has also been on the move since the start of November. Growth in its cloud computing and online advertising divisions is also helping to push the share price higher.

Finally, there’s Berkshire Hathaway. Warren Buffett might not think the stock’s undervalued right now, but that hasn’t stopped investors buying into his investment vehicle for their own portfolios.

The S&P 500’s up 28% since the start of the year. But so far, Citigroup (34%), Games Workshop (+45%), Amazon (+46%) and Berkshire Hathaway (29%) have done better. 

That puts me in a position where I have to consider a difficult question. Should I stick with them while they’re doing well, or look to redeploy cash into other opportunities?

Citigroup

The most interesting example is Citigroup. I bought the stock when Jane Fraser took over as CEO with a view there was clear scope for improvement that the share price wasn’t reflecting.

I think the turnaround plan is progressing reasonably well. Its plan is to sell off some of its international retail operations to focus on its core areas of competence.

My view on the company hasn’t changed. But the stock’s now 40% more expensive than it was when I bought it, so it’s worth considering whether the future growth’s now priced in.

I wasn’t expecting the stock to do well this year – my view was a long-term one based on the outcome of Citigroup restructuring its business over a few years. So this has been a surprise.

At a price-to-book (P/B) ratio of 0.7, Citigroup shares trade at a discount to the other major US banks. But they are roughly level with their average multiple over the last 10 years.

I’m reasonably sure I wouldn’t buy at today’s prices and with the investment equation looking less attractive, I’m thinking about selling. The issue though, is finding something else to buy instead.

Outperforming

Outperforming the S&P 500 isn’t easy. And I’m not sure whether or not my overall portfolio is ahead this year. Strong gains in some stocks have been offset to some degree by others – Diageo being one example. That stock’s down 17% since January, which is a significant drag on overall returns. 

Ultimately, performance in one year doesn’t really matter – it’s the long-term result that counts. And this is what I’m considering when working out what to do with my investments.

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When I invest in dividend shares, I try to follow Warren Buffett’s approach. Rather than steadily investing in the same companies each month, I look to be aggressive when I think there’s an unusually good opportunity.

Right now, there are a few stocks on my radar. And I’m looking to buy them hand over fist when I have cash available. 

Primary Health Properties

Top of my list is Primary Health Properties (LSE:PHP). The company makes its money by leasing primary care properties in the UK. 

The shares are trading at a steep discount to where they were a year ago. The share price has fallen by 30% over the last 12 months and the stock has a dividend yield in excess of 6%. 

Despite this, the company is performing well according to a couple of key metrics. Its occupancy rate is above 99% and it has collected 98% of the rent it was due so far this year.

In other words, the business is still generating strong cash despite its falling share price. Its rental income is actually growing, as a result of heavy investment in its properties. 

No investment is ever risk-free, though, and there are a couple of things investors will want to keep an eye on. The biggest of these, in my view, is the company’s balance sheet.

Refurbishing and extending its properties has required capital and, with the company distributing its income as dividends, it has had to take on significant debt to do this. With interest rates rising, that might be a concern.

Overall, I think the stock is just too cheap to miss at today’s prices. If I had cash available, I’d be looking to buy as much of it as I could.

Citigroup

There’s a lot of uncertainty around Citigroup (NYSE:C) at the moment, which is weighing on the company’s share price. But I think this makes it a bargain that is too good to pass up right now.

Citigroup’s share price has fallen by 7% over the last year, meaning the stock currently has a dividend yield of around 4.5%.  But the company has also been buying back its own shares, offering investors an additional return.

The stock has been faltering for a couple of reasons, but the main thing it comes down to is the company’s low return on equity. This measures a bank’s ability to generate a return on its customer deposits. 

Citigroup has historically lagged its peers on this score. The company is selling off several of its less efficient operations to improve its overall performance, but there’s a risk this might be expensive and have limited effect.

Even with the uncertainty over the outcome of its restructuring, I think the share price is just too cheap. I’ve been buying the stock aggressively over the last year or so and I expect to continue.

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I’ve been using the opportunity to buy shares in two banks this week – Bank of America (NYSE:BAC) and Citigroup (NYSE:C). Here’s why I’ve opted for these over any of the UK bank stocks.

Sell first, ask questions later

Bank shares have been falling lately. But I don’t believe these declines are justified in the case of either Bank of America or Citigroup, which is why I’ve been buying both.

The last month or so has seen some significant stress in the banking sector. I don’t see any sign of the liquidity concerns that have troubled smaller regional banks at either BofA or Citi though.

In fact, the banks I’ve been buying might even be stronger than they were a month ago. The engine of each business is its deposit base, which has been growing as risk-averse customers move their cash.

Despite this, Bank of America shares have fallen by around 19% over the last month. And Citigroup shares are down around 11%.

I’m not saying that either is entirely without risk. That’s clearly not true – each has its own issues to contend with that present concerns for investors. 

Tighter regulations – either for liquidity, or provisions for bad loans – might cut into Bank of America’s profitability. And Citigroup is in the middle of restructuring, which could prove expensive. 

Over the last month though, a sell-first-ask-questions-later approach from investors has seen both stocks fall to levels I think are unjustified. That’s why I’ve been buying them for my portfolio.

Why not UK banks?

Fair enough, but something similar is true of UK banks. So why have I been buying the US banks, rather than Lloyds Banking Group and Barclays?

In my view, the US banks offer better shareholder returns. While Lloyds and Barclays offer attractive dividends, Bank of America and Citigroup also return capital to investors via share buybacks.

When companies repurchase their stock, the number of shares outstanding comes down. As a result, each remaining share accounts for more of the overall business, making it more valuable.

BoA has bought back 30% of its stock over the last decade, meaning each remaining share is worth 40% more. And Citi has repurchased 36% of its shares, resulting in a 56% increase in per share value.

With Lloyds and Barclays, there’s just no comparison. Lloyds has brought its share count down by just under 2% and the number of Barclays shares is higher than it was a decade ago.

That’s why I’ve been focusing on the US banks. As a UK investor, this brings an additional risk of currency fluctuations, but I think the additional return is more than worth it.

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Despite this, there are a couple of stocks in the Berkshire Hathaway stock portfolio that have eye-catching dividend yields. And I think that both are good shares to buy at today’s prices.

Kraft Heinz

Kraft Heinz (NYSE:KHC) is the seventh-largest holding in Berkshire’s portfolio. At today’s prices, it has a dividend yield of just over 4%

The company’s main competitive advantage is the strength of its brands. These allow the business to maintain stronger operating margins.

Since 2018, Kraft Heinz has consistently maintained operating margins just above 20%. This compares favourably with Unilever (18%) and Kellogg Company (18%).

To my mind, the biggest risk with the shares is consumers switch to newer and fresher alternatives. There was something of a trend towards this before the start of the pandemic.

It’s also worth noting that the company has a patchy dividend record, which has stayed at $1.60 per share since it was cut in 2019. But I think there’s room for optimism here.

At the time, Buffett said that improving its balance sheet should be the priority for Kraft Heinz. Since then, long-term debt has come down by 25%, leaving the company in much better financial shape.

As a result, I’m expecting better shareholder returns in future, either by higher dividends or by share buybacks. And a 4% dividend now while I wait puts Kraft Heinz shares on my buy list.

Citigroup

In some ways, Citigroup (NYSE:C) is similar to Kraft Heinz, despite its business operating in a very different sector. The firm is in the process of executing a turnaround that I think will leave it in a better place going forward.

At today’s prices, the stock has a dividend yield a little above 4%. And (like Kraft Heinz) the dividend has been at that level since 2019.

Citigroup is currently in the process of restructuring. It’s selling off some of its international consumer operations to leave a global commercial bank and a US retail bank.

Over time, this should make the company more efficient and allow it to earn better returns on its capital. But restructuring stories are always risky and this one is no exception.

The biggest risk comes from its expenses. Restructuring will incur big costs and maintaining its global corporate business is likely to prove expensive over time.

Despite this, I think the shares are a bargain. The current price values the entire company at around $97bn, but the value of the company’s assets after subtracting its liabilities is around twice this.

That means Citigroup’s stock trades at a price-to-book (P/B) ratio of around 0.5, which is substantially cheaper than its peers. Bank of America trades at a P/B ratio of 1.2 and JP Morgan trades at (1.6).

It’s also worth noting that Citigroup has been buying back its shares since 2019, reducing the outstanding count by 12%.

This makes the dividend incrementally more affordable for the company. Paying out $2.04 per share is less expensive with 1.99bn shares than it is with 2.27bn.

I see Citigroup as a business with significant potential with a good dividend right now. The stock is the 14th-largest holding in the Berkshire portfolio and I’m buying it as well.

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All of that takes time. But that means it’s important to get started as soon as possible — if the right opportunities are available. 

I’m aiming to build an investment portfolio that can generate passive income for me for life. With that in mind, here are two stocks that are on my list to buy in February.

Rightmove

My top pick for passive income might seem like a strange choice. At 1.3%, Rightmove (LSE:RMV) doesn’t exactly have an attractive dividend yield. 

The company’s dividend is growing rapidly, though. Over the last 10 years, Rightmove’s dividend has increased by an average of 15% per year. 

If that carries on, then after 25 years, I’ll be earning 45% per year on my initial stake. In other words, a £1,000 investment today could be paying £450 per year in passive income.

It’s important to note that the company’s dividend growth hasn’t been linear, though. In 2020, Rightmove cut its dividend entirely and there’s always a risk that this could happen again.

A weak UK housing market — such as the one we’re experiencing at the moment with house prices falling since last August — could cause that to happen. But I see this as an opportunity.

I think that Rightmove has a strong balance sheet, terrific cash generation metrics, and a buyback programme that can help boosting the shares going forward. That’s why I’m looking to buy it this month.

Citigroup

Todd Combs (a Berkshire Hathaway investment manager) recently gave an interview where he talked about how Warren Buffett finds stocks to buy. That leads me to Citigroup (NYSE:C).

According to Combs, three things are important. One is a forward price-to-earnings (P/E) ratio under 15, another is a business that will be stronger five years from now, third is a company that can grow earnings at 7%.

I think that Citigroup checks the boxes here. Let’s start with the easy bit — the stock currently trades at a forward P/E ratio of just under 8. 

Will the business be in a better position five years from now? I think it will.

Citigroup is currently restructuring its operations. That process might take some time, and there’s a risk it might prove expensive in the short term, but I’m expecting it to be completed by 2028.

The end result should be a stronger business than the current one. The company is looking to become more efficient by focusing on its core strengths and disposing of peripheral operations.

Lastly, I think the business can achieve a 7% annual return. Citigroup currently achieves a return on equity of 8%, and I think this will only increase as the company becomes more efficient.

Citigroup shares might be out of fashion at the moment. But I’m looking to buy the stock for its 4% dividend yield and opportunities for future business improvement.

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A central part of the Oracle of Omaha’s strategy is holding investments for long periods of time. This approach has produced some spectacular results.

Compounding returns

One of the most obvious examples of this is Coca-Cola. Since Buffett first bought the stock in 1988, the share price has increased by around 9.5% per year on average. 

By itself, that might not sound like a spectacular return. But over 34 years, it adds up to something quite amazing. 

Since 1988, the Coca-Cola share price has increased by 2,171%. And that’s before accounting for the dividends that the company has paid out. 

In my view, there’s an important lesson for investors like me here. The lesson is that the really big gains from the stock market take time to develop.

That means that it’s important not to be drawn into selling investments too early. With quality investments, it’s best to give them time to develop.

In my portfolio, I have a few stocks that Warren Buffett owns in the Berkshire Hathaway portfolio. But there’s one in particular that I’m planning on holding forever.

Citigroup

The stock is Citigroup (NYSE:C). I see this as a company trading at a very attractive price with some clear catalysts that can help it to do well in the future. 

Right now, the stock trades at a price-to-book (P/B) ratio of around 0.5. That’s significantly lower than JP Morgan (1.6), Bank of America (1.3), and Wells Fargo (1.2). 

There’s a reason that Citigroup’s shares trade at a lower valuation than those of its peers. The reason is that it has historically been less efficient.

Citigroup has consistently managed a lower return on equity than Bank of America, JP Morgan Chase, and Wells Fargo. As such, the stock has traded at a lower multiple.

That could be about to change, though. Citigroup is currently restructuring its operations to make them more efficient, which involves selling off a number of its businesses.

At its most recent investor day, Citigroup’s management stated that they were aiming for an 11% return on equity. If they can achieve that, then I think that the stock is a bargain.

An 11% return would put Citigroup roughly level with its peers. In other words, I think that Citigroup shares are cheap compared to what the company could turn out to be.

Buying and holding

There’s always a risk with stocks and Citigroup is no exception. If management can’t reach its 11% return on equity target, then returns could be disappointing.

But the low valuation on the stock more than offsets this risk, in my view. As I see it shares are just too cheap to miss.

That’s why I’m looking to follow Warren Buffett’s approach and hold my Citigroup shares for decades. If I can avoid having to sell, I think that I’ll do very well.

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In general, I like to try and invest in companies when everyone else is looking the other way. But there are three dividend stocks that I’m looking to buy in December.

Realty Income

First on my list is Realty Income (NYSE:O). I bought this stock in November, I’ll be buying it in December, and I expect to buy it in January, too.

The company is a real estate investment trust (REIT) that pays its dividends monthly. Right now, the stock has a dividend yield of just over 4.5%.

I think that Realty Income could be a great stock for me to own in a recession. As corporate earnings fall, a steady stream of rental income seems attractive to me.

There’s a chance that higher interest rates will bring down property prices, which is a risk to the company’s portfolio. But I think that this could actually be a good thing.

With REITs, the main obstacle is usually growth. And Realty Income’s size makes this especially challenging.

Lower property prices might help here, though. The company has a decent credit rating and this should help it to take advantage of cheaper growth opportunities.

Kraft Heinz

I’m also looking at adding to my investment in Kraft Heinz (NASDAQ:KHC). The share price is up by 11% over the past 12 months, but I still think there’s an excellent opportunity here for me.

The stock looks expensive and it looks risky. Right now, the company trades at a price-to-earnings (P/E) ratio of just under 40.

I think that this is less risky than it looks, though. The company’s net income is the result of subtracting a non-cash charge of $2.2bn asset impairment charge.

As a result, the company’s earnings don’t reflect the cash the underlying business is generating. The stock trades at just over 13 times the free cash it generates.

I therefore think that Kraft Heinz shares aren’t as expensive as they look. I see this as an opportunity to buy a steady, predictable business at a decent price.

Citigroup

Last on my list of dividend stocks to buy in December is Citigroup (NYSE:C). This is one of the largest holdings in my portfolio and I’m planning to increase my stake in December.

As with the others, the current dividend yield on Citigroup shares is over 4%. That’s following a decline of over 25% in the share price over the last year.

The company has a significant amount of consumer debt on its balance sheets. Rising interest rates increases the possibility of loan defaults, which is a risk for this business.

Nonetheless, I think that the share are a bargain. Right now, the stock trades at a price-to-book (P/B) ratio of just over 0.5.

That means that the company is still likely to be worth more than its current share price implies even if some of its loans don’t get repaid. And that’s the main reason I’ll be buying the stock in December.

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With the stock market falling at the moment, a lot of investors are looking for safe investments. While no stock investment is ever 100% safe, some are riskier than others.

With that in mind, here are three stocks that I think qualify as relatively safe investments. All three are on my list of stocks to buy now.

I’m not saying that these stocks won’t go down in the future. They might. But I think that the underlying businesses have enough cash to keep themselves safe.

Berkshire Hathaway

Top of my list of safe stocks to buy for my portfolio is Berkshire Hathaway (NYSE:BRK.B). As I said, Buffett’s first rule of investing is not to lose money and the Berkshire CEO lives by his own advice.

The risk with Berkshire shares is that the company might not grow as quickly as smaller businesses. Both Buffett and Charlie Munger have suggested that this might be the case.

As an example of a business that’s unlikely to lose money though, I think it’s terrific. At its last earnings report, the company had around $70bn in excess cash — far more than any of its peers.

I think that this gives Berkshire Hathaway a lot of protection against any unforeseen difficulties. That’s part of the reason that the stock is already the largest investment in my portfolio.

Citigroup

Suggesting that a bank might be one of the safest stocks today might seem like madness. And while Citigroup (NYSE:C) doesn’t exactly have a history of being a steady stock, it makes my list here.

I think the stock is much safer than it was before, though. The main reason for this is that it has significant amounts of cash (just over $18bn) set aside to cover the possibility of loan losses. 

The company is currently restructuring and this brings with it a significant risk. But I think that a good amount of that risk is being factored into the Citigroup share price.

Citigroup shares currently trade at around 57% of their tangible book value. To me that indicates that I’m unlikely to suffer significant capital loss as an investor.

That ratio also compares favourably with Citigroup’s peers. JPMorgan Chase (1.49), Bank of America (1.21), and Wells Fargo (1.1) all trade at significantly higher multiples.

Rightmove

Lastly, I think that Rightmove (LSE:DPLM) is one of the safest UK stocks on the market right now. This might also seem strange, but I think that the company’s balance sheet justifies its inclusion here.

The main reason I see Rightmove as a safe stock at the moment is its balance sheet. The company has just under £48m in cash and around £11m in total debt.

As Peter Lynch says, it’s difficult for a company to get into serious trouble with more cash than debt. And Rightmove’s cash-to-debt ratio is better than bigger technology companies, such as Microsoft, Adobe, and Salesforce.

A slowing property market in the UK might indeed create a headwind for Rightmove’s earnings in the near future. But I think it’s a good candidate for me as a safe stock to buy now for my portfolio.

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