It’s new ISA time again, and the £20,000 limit has just reset. So what would I buy to start a new Stocks and Shares ISA this year?
I want good value above all. I also want dividends or good growth. Today I pick five that I’d buy in a 2023 ISA if I was just starting out.
I’d buy a bank stock, for sure. For years, Lloyds Banking Group would have been the one. But right now, I rate Barclays as best value. There’s a price-to-earnings (P/E) of only five, and a 5% dividend yield.
Should you invest £1,000 in National Grid right now?
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I think that’s super cheap. It’s down to the new 2023 bank scares starting in the US. And there are clear risks there, at least in the short term. But it would be on my list.
Cheap stocks
While I think of cheap shares, I’d add Scottish Mortgage Investment Trust to a new ISA. Most of the high tech stocks it holds have slumped, and the trust’s share price has dropped too.
It’s now on a huge discount of more than 20%. That’s due to the chance of more tech stock falls, and I think that’s a very real risk. But I see a buy for the long term here.
For a new ISA, I’d have to buy a housebuilder. And I think I’d go for Taylor Wimpey right now. The P/E is down at 6.5, with a dividend yield of 8%.
Now houses are in a dip, and I think the dividend might be cut. But long-term demand has got to be high, and that’s why I’d buy. Hmm, that might just add growth to the mix too.
Shaky markets
When stock markets shake, asset managers and the like tend to fall. That’s true for M&G, which is my fourth pick.
The P/E isn’t that low just now, but forecasts show it falling to around nine with earnings set to grow in the next few years. Add in dividend yields of 10%, and that makes it a buy for me. That’s even with the clear stock market risk for the rest of 2023 and maybe into 2024.
There’s a lot for me to go for with my next choice, as so many UK shares look cheap to me now. I’d like to add a FTSE 250 stock to my ISA, or maybe a small-cap stock.
Safe pick?
But for my first five in a new ISA, I’d stick with what I hope are safe FTSE 100 stocks, and I could look at more next year.
So my final choice would be National Grid. With a P/E of 15, the value is fair, but good enough. And a 5% yield is good, if not great. But it has to be one of the most steady UK stocks for income.
All these stocks all have their own risks, mainly in the short term. But I think I have some diversified choices here.
Add that to my aim to hold for at least 10 years, and I’d say this ISA mix should keep the risk down quite well.
