My Stocks and Shares ISA has two purposes. The first is to build my wealth while I work. The second is to release income after I retire.
I have some great growth stocks, including cosmetics manufacturers War paint and outsourcing companies Costain Group. But I also have a bunch of income-paying FTSE100 Blue chips, and I place most of my hopes in them.
Today they are largely overlooked by investors who prefer to go with the flow of the Magnificent Seven US tech heroes. My FTSE favourites may be a little boring, but they are beautiful in their own way.
Beauties of the FTSE 100
I prefer to buy stocks when they are out of demand rather than when they are trading high. This way I can buy them at a discounted price and secure a higher return.
I think that once interest rates peaked and savings rates and bond yields fell, UK dividend stocks would become popular again. It has taken longer for this scenario to play out than I had hoped, but it should happen eventually. And when it does happen, I hope to get share price growth in addition to my dividend income.
My seven favorite blue chips that aren’t exactly great are GSK (LSE:GSK), Lloyds Banking Group, Legal & General Group, M&G, Phoenix Group Holdings, Unilever And Taylor Wimpey.
They are boring compared to, say, NVIDIA And Teslabut occasionally cause excitement.
Taylor Wimpey’s share price is up 33.79% in the last year and still yields 6.1%. Lloyds is up 29.11% and yields 4.64% (forecast is 5.5%).
The Phoenix share price has been boring for ages, but it still yields 9.92%. It was a beautiful day when the last dividend was added to my portfolio.
Heroes of Dividend Income
GSKwas interesting, but in the wrong way. I bought the shares in March and again in June thinking the share price would recover. So far I’m down 10.73%. It’s early, but I expected more. Over a year, they’re up 8.61%.
Pharmaceutical stocks are considered defensive, but they can also be volatile. Bringing new treatments to market is a long process with the potential for failure at every turn. Even the patents for blockbuster successes eventually expire and sales decline, so exciting new treatments must be found.
There is also the risk of litigation. GSK’s heartburn treatment Zantac was accused of causing cancer. News that the cases would go to trial in the US sent GSK’s share price down 10% in a single day. It hasn’t recovered yet and probably won’t until the trial is over. And maybe not even then if the verdict goes the wrong way.
But I’m going to hold on. In the long run, I think GSK shares will do well and today’s mediocre yield of 3.89% will finally recover.
These seven oh-so-boring shares will sit in my stocks and shares ISA for years doing their thing. When I retire, I expect them to provide me with tax-free income and maybe some capital growth too. Beautiful.
The post These boring but beautiful tips will always have a place in my stocks and shares ISA appeared first on The Motley Fool UK.
Further reading
Harvey Jones holds positions in GSK, Legal & General Group Plc, M&G Plc, Phoenix Group Plc and Taylor Wimpey Plc. The Motley Fool UK has recommended GSK and M&G Plc. The views expressed on companies mentioned in this article are those of the author and may therefore 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.
Motley Fool UK 2024
