The Stocks and Shares ISA deadline has now passed, which means I’ve got a fresh £20,000 limit that I can use for the next year. If I’ve got some cash spare at the moment, I can start looking for the best UK shares to buy now. If I bought a stock today within my ISA, then whenever I come to sell it, the proceeds wouldn’t attract any capital gains tax on the profits.
My checklist for finding the best UK shares
First up on my checklist is to look at the past performance of UK shares that I think I might buy now. Past performance is no guarantee of future returns, but it does act as a guide to show me what the trend has been over a one-year or longer period.
For example, do I really want to buy a stock that has seen a falling share price over the past few years? There might be a good reason for the answer to be yes, but I want to ensure I know how the share price has been trending before looking to get involved.
Another point on my checklist is to get other opinions on whether the UK shares that I think are the best to buy now are really worth it. I can do this via my own friends, or check for coverage of the stock from authors on The Motley Fool.
A third checklist point is to check the financial statements of the company I’m thinking of. This might sound boring, but it could save me from making a very poor investment! For example, what is the net debt of the business? Or the size of the gross and operating profit margins? These numbers can show me if the business might struggle to perform in the future.
Checking for outlooks and dividends
Before buying a potentially good UK share right now, my fourth point is to look at the outlook given by the CEO or Chairman in the last trading update. This is important for me as I’m investing for the future. Obviously, a lot of companies at the moment have uncertain outlooks due to the impact of the pandemic. But in my opinion, the best UK shares to buy now would those focusing on a growth strategy. Those that are focusing on a transformation period or cost-cutting wouldn’t be my focus at the moment.
A further point on my checklist is to look and see what the dividend prospects are. This is because the best UK shares right now could be those that offer me good dividend income. My aim as an investor isn’t just to benefit from a rising share price. It’s also to try and generate some passive income as well. So a company that has an attractive dividend yield and high dividend cover would definitely be worth my time to look at.
Overall, if I go through all five points, I think it puts me in a much better position to see which are the UK shares I could be putting in my ISA this year.