Even with a huge number of stock picks available on the internet, sometimes fresh ideas can be hard to come by. When I’m considering putting some extra cash into my Stocks and Shares ISA, I could simply invest more in the stocks I already own.
However, here are some ideas that I think could help me to outperform the market over the coming year.
High-potential value plays
Some investors are fearful at the moment and are selling stocks in the process. This is helping to push some value stocks down to relatively low prices. It’s at this point that I can look to step in and buy. Then, over time, if the share price returns to a normalised level, I can bank the difference as profit.
For example, the share price of British Land Co has fallen by 21% over the last six months and 20% over the past year. Has the property portfolio of the real estate investment trust (REIT) dropped in value by this much? I very much doubt it.
Clearly, concerns around the cyclical nature of property and the broader economy are well founded. But I have two angles of attack here. I can hold the stock as a value play and sit out potentially volatile times ahead before things settle down. At the same time, I can also benefit from the regulations around REITs that ensure I’ll be picking up income. The current dividend yield is 5.58%.
Using cash for IPOs
Sometimes, new ideas come in the form of newly-listed companies. Even though 2022 has been a much slower year for initial public offerings (IPOs), there are some big names due to list before the end of the year.
One I’m keen to go for is Porsche. Even though the listing is unlikely to be in London, I can still include it in my ISA. A formal date hasn’t yet been set, but is likely to be within the next couple of months. After seeing the strong share price performance of Ferrari over the past couple of years, I think Porsche has a lot of similar characteristics that should enable it to perform well.
Given that I don’t pay any capital gains tax on profits within my ISA, buying straight after the IPO can allow me to get involved at a good time, to yield long-term profits.
Trusty income sources for my Stocks and Shares ISA
Finally, I’d set aside half of my £1,000 for income stocks. This isn’t a new concept by any means. To a certain extent, I’m happy to go for well-known companies here and try and not rock the boat too much.
This isn’t me being boring. Rather, dividend stocks that have a track record of paying dividends for years have exactly the characteristics I’m looking for! After all, what’s the point in investing in some unproven company that has just started paying dividends? I don’t know if this will continue for years to come.
To that end, a good example I think I’ll buy is British American Tobacco. It currently has a yield of 6.31% and 22 years of consecutive dividend growth. Any income I receive isn’t subject to dividend tax, meaning I benefit from holding the shares within my ISA.
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.
The post Stuck for ideas? Here’s how I’d invest £1,000 in my Stocks & Shares ISA appeared first on The Motley Fool UK.
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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco and British Land Co. 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.