There’s no doubt the Cash ISA is a product that has its uses. I’ve an easy access one which I deploy for holding money for short periods, and to secure funds I like to have handy in the event of a rainy day.
However, because of the paltry interest rates on offer means I’ve chosen to invest the lion’s share of my hard-earned cash elsewhere and, more specifically, in the London stock market.
A quick scan of price comparison website Moneysupermarket.com shows the best-paying instant access Cash ISA on the market from AA boasts a 1.42% (AER) interest rate. With inflation in the UK currently running above 2%, this means that, essentially, your money is losing more and more of its value the longer it’s locked up.
Compare these pathetic interest rates with the average forward yield of 4.5% that investors can enjoy with FTSE 100 stocks and things get even more puzzling. Quite why any of us are so wedded to stashing all or most of our capital in wealth-eroding Cash ISAs, given some of the returns you can expect from stock investing, is quite beyond me.
Up, up and away!
Of course, parking your cash is a conventionally safer than stock investing. Just ask those individuals who chose to stash the cash in FTSE 250 divers Kier Group, Metro Bank or Saga — shares which have lost two-thirds or more of their value over the past 12 months — how they’re feeling right now.
That said, there’s no shortage of great dividend companies quoted on London’s second-tier index which I consider to be safe as houses. Cineworld Group (LSE: CINE) is one such stock, and a share I’ve felt confident enough to plough my own money into.
Why am I so bullish? The intense pulling power of so-called popcorn movies — in other words superhero flicks, sequels and reboots — which Hollywood remains committed to producing, that’s why.
Franchises from Star Wars to The Avengers, Toy Story to The Fast And The Furious, have been pulling people into the picture houses in their droves for donkey’s years now. If anything, these films are more effective in putting bums on those plush seats than ever before.
Dividend hero
I first bought into Cineworld in the hope of some big dividends and the company hasn’t disappointed on this front. In fact, I can honestly say it’s exceeded my expectations.
Last year, it hiked the full-year dividend 18% to 15 US cents per share, the board feeling encouraged enough by the performance of its recently-acquired US businesses to supercharge the payout. And then last week, it announced it was paying a special dividend of 20.27 cents, a reward generated from the proceeds from the sale and leaseback of 18 of its North American cinemas.
As I write, City analysts expect Cineworld to pay an ordinary dividend of 17.6 cents per share in 2019, an estimate that creates a bulging 5% yield. So, once again, I say forget about those paltry returns Cash ISAs currently offer. I think this movie star is a much better way to make money.