Today I’m examining a mix of three very different companies as possibilities for your ISA. If you still have some of your old £15,000 limit that you want to use up you don’t have long before it expires on 5 April, otherwise you might consider these for some of your new £15,240 allowance:
HSBA
HSBC Holdings (LSE: HSBA)(NYSE: HSBC.US) enjoys the mixed blessing of being diversified worldwide. On the one hand it was nowhere near as badly effected by the West’s banking meltdown, but at the same time its exposure in the East makes it vulnerable to any slowdown in China. Still, that much-feared event still hasn’t happened and Chinese growth is still motoring at around 7.5% per year, and on balance HSBC’s earnings have remained largely stable over five years.
Meanwhile, with the shares at 576p we’re looking at a forecast dividend yield of 6.1% this year, and that’s the equivalent of a cash return of £930 from a full ISA — compare that to the £240 you’d be lucky to get from the very best cash ISA!
The dividend is not as well covered as, say, Barclays‘, but even a small cut would still leave a strong yield — and on forward P/E multiples of 10.3 and 9.8 for 2015 and 2016, the shares look well priced for the long run.
SABMiller
After a 30% rise to 3,671p over the past 12 months, SABMiller (LSE: SAB) shares are on a significantly higher P/E, of over 20. But the global brewer has put in years of steady earnings growth, and after a minor 6% fall expected for March 2015, there’s more growth forecast for the next two years.
Dividends are modest, with yields of only around 3%, but SABMiler has an enviable track record of soundly beating the FTSE 100 in the long term — over the past decade it’s gained 332% against just 37% for the FTSE.
In SABMiller you’d have a safe long-term cornerstone, and that’s not a bad thing to have in a portfolio.
Glencore
Low metal and mineral prices have pushed the mining industry into a slump in recent years, and Glencore (LSE: GLEN) has suffered along with the rest — over five years we see a 46% fall to 280p.
But dividends have been maintained in the past few years, reaching a yield of 4.1% last year, with 4.3% and 4.6% predicted for the next two. This year’s would not be well covered, but two years of expected rises in earnings would result in strong cover in 2016.
Glencore, with its interests in mining and in energy and agricultural commodities, looks well-place for a cyclical recovery.