Whenever stock markets are down, I think what a great time it could be to start a Stocks and Shares ISA. And I think about the 10 shares I might choose, right now.
I take little notice of current conditions — except for being able to buy shares cheaper. Some investors adjust their purchases to cope with the times. But I prefer to ignore the times, and buy for the long term.
Here are 10 shares I’d buy in a Stocks and Shares ISA today, to hold for at least the next 10 years.
| Company | Recent Share price | Forecast P/E | Forecast dividend yield | 1-year performance |
| City of London Investment Trust | 383p | * | 5.2% | -0.4% |
| Alliance Trust | 933p | * | 2.6% | -8.0% |
| Lloyds Banking Group | 42.5p | 6.2 | 5.7% | -9.3% |
| Admiral | 1,925p | 14 | 8.5% | -37% |
| National Grid | 895p | 9.0 | 6% | +0.5% |
| Scottish Mortgage Investment Trust | 756p | * | 0.5% | -45% |
| Greggs | 1,805p | 15 | 3.3% | -40% |
| GSK | 1,344p | 11.5 | 4.5% | -4.6% |
| M&G | 172p | 8.3 | 12% | -14% |
| Taylor Wimpey | 91p | 5.0 | 10% | -39% |
I haven’t included price-to-earnings (P/E) ratios for investment trusts. They’re pooled investments that spread the money across a range of companies, and I don’t think the P/E is a very meaningful measure.
Dividends
I’ve gone mainly for stocks that I think can deliver good long-term dividends. They don’t all offer super high dividends currently. And I expect some of the big dividend yields will drop in coming years. What I hope from all of the chosen dividend stocks is a solid progressive dividend over the long term.
I also have Scottish Mortgage Investment Trust, but not for dividends. It’s the one straight growth pick in the mix, and it invests mainly in Nasdaq technology stocks. Many of those have fallen heavily in the past year, and I find the valuation attractive at the moment.
Valuations
Talking of valuation, most of these have seen their share prices fall in the past 12 months. And that’s largely because they’re in sectors that the market sees as especially risky today. In particular, that includes banking, insurance and housebuilding.
I didn’t choose them because of the fall, and I see the risk as mainly being short term. They made it onto my list simply because while their valuations are low now, I see them as quality companies with good long-term prospects.
Buy them all?
If I had, say, £10,000 to start a new Stocks and Shares ISA today, I think I’d be happy to buy those 10 stocks. But there are alternatives. I like Barclays as another banking pick. I also think most insurers are good value now, as are most housebuilders.
But what if I didn’t have a full £10k to spread across this number of stocks? I’d have to go for them one at a time, as and when I have enough for an individual investment.
Minimise risk
And to minimise my early risk, my first two would be City of London and Alliance Trust. Investment trusts provide some handy diversification in a single investment.
One thing I would do first, though, is investigate the risks. Every one of these carries risk, as do all stocks, linked to both their operating sectors and their own company specifics.