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Some costs in life are best avoided, like restaurant corkage or ATM withdrawal fees. And a Stocks and Shares ISA’s an excellent way of keeping these down when it comes to investing.
Without taxes on capital gains and dividends, investing regularly in an ISA can be a great strategy for trying to build wealth and earn passive income. But finding the right stocks to buy each month is also important.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Growth: Porvair
In the world of growth, Porvair’s (LSE:PRV) a stock that could be in for an interesting February. The company makes filtration products for aerospace, laboratory, and industrial settings.
Its products benefit from significant barriers to entry and earnings per share have grown strongly over the last decade. But selling into cyclical end markets can bring risk when things turn downwards.
With both Boeing and Airbus reporting production problems recently, aircraft production’s been lower than in previous years. And that might reduce demand for Porvair’s products in the short term.
The company reports earnings on 10 February and I’ll be watching closely. If the stock falls in a meaningful way as a result of any short-term disruptions to sales, I’ll be looking to take advantage.
Value: Lloyds Banking Group
Shares in Lloyds Banking Group (LSE:LLOY) got a big boost in January with some positive news about the ongoing investigation into car loans. But I think there could still be interesting value on offer.
On a price-to-book (P/B) basis, the stock’s roughly where it was five years ago. By contrast, Barclays and NatWest are trading at much higher multiples than they were as a result of interest rates rising.
The car loan investigation’s still a risk – and more so for Lloyds than the other UK banks. But the question for investors is whether the current share price is enough to offset this.
I think it might be. That’s why I’ll be paying close attention to what management has to say on the subject when the company reports earnings on 20 February.
Dividends: Supermarket Income REIT
With dividend stocks, I think the real estate sector looks interesting. And shares in Supermarket Income REIT (LSE:SUPR) are trading at their lowest levels since the company went public in 2017.
Tesco and Sainsbury’s account for a lot of the firm’s income. And while neither’s likely to default on its rent, a heavy reliance on them doesn’t put Supermarket Income REIT in a strong negotiating position.
However, the stock currently has a 9% dividend yield, which might provide a decent return by itself. On top of this, the company’s rental contracts increase with inflation, which also removes this threat.
I’m generally wary of stocks that come with high dividend yields. But while there are clear limitations with Supermarket Income REIT, I think dividend investors should consider it seriously right now.
UK stocks
I think February could be an interesting month in the UK stock market. I’ll be looking closely when Lloyds and Porvair report to see if a long-term opportunity’s being masked by short-term issues.
If not, Supermarket Income REIT might be the stock for me to buy. A lot of my investing this month will come from reinvesting dividends, so I have time to see what happens while I wait for the cash.
