LONDON — You love your money. You’ve worked hard for it, after all. If you’ve taken the wise step to open and fund your Stocks & Shares ISA this year, congratulations.
You’ll shelter that money from the tax man, and you now have a great opportunity to do more with your cash than any bank will offer.
So, what should you look for in shares to fill your ISA with? If you’re like me, you want shares that won’t give you any heartburn — the kind you can set in your portfolio and then leave them be for a while.
The formula for finding shares that will give you some peace of mind doesn’t need to be complicated. I argue that you should look for:
Big, stable companies with lasting power;
Established brands with competitive advantage;
Shares that will pay you consistent income — and have the balance sheets to back that dividend.
Here are four set-and-forget share ideas for you this ISA season.
Trait 1: Size and stability
GlaxoSmithKline plc (ADR) (NYSE:GSK) is a massive, 72 billion-pound company with a long tenure in the pharma industry and a strong history of returning cash to shareholders. Though not impossible, wild share-price swings in a company like Glaxo are unlikely.
The pharma industry has been a bit out of favor recently, with patents lapsing and governments tightening their spending in the sector.
But I reckon GlaxoSmithKline plc (ADR) (NYSE:GSK) doesn’t cause shareholders many sleepless nights over share-price volatility, making it a candidate for set-and-forget ISA investors. Though it hasn’t risen at a pace anywhere near the FTSE 100, it has slowly churned along and thrown off a lot of cash in the form of dividends.
In 2012 alone, GlaxoSmithKline plc (ADR) (NYSE:GSK) returned 8.8 billion pounds to shareholders through share buybacks and dividends. It currently pays about a 5.1% yield, edging out the pharmaceutical average of 4.8% — and leaving bank savings account rates in the dust.
If you’re after a market-beating share, look elsewhere. But if you’re after a steady performer for your ISA — one that pays a nice quarterly dividend of about 17 pence per share as well — then GlaxoSmithKline plc (ADR) (NYSE:GSK) is one to consider.