The Stocks and Shares ISA is a great vehicle for long-term investors like me. April 5 is the deadline for me to take advantage of the £20,000 ISA allowance for this year. But it also marks the beginning of a new financial year and a reset of the ISA allowance.
So, with the ISA deadline fast approaching, I’ve been thinking about a few stocks that I’ll consider buying for my ISA right now and over the coming week.
Russia’s invasion of Ukraine caused considerable volatility on the stock market. With share prices crashing, there were — and still are — many stocks with substantial upside potential. However, while I’m looking for growth in share prices, after inflation hit 6.2% in February, I also favour passive income in the form of dividend-paying stocks. I’d buy these three.
Should you invest £1,000 in Barratt Developments right now?
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Legal & General
The Legal & General (LSE:LGEN) share price tumbled following the invasion of Ukraine but recovered in early March after the multinational financial services firm raised its dividend. The good news for shareholders came on the back of a 39% rise in annual pre-tax profits.
In 2021, Legal & General’s post-tax profit increased by 28% to £2.05bn. It was the first time that this metric exceeded £2bn.
The London-based insurer is now offering an attractive 6.76% dividend yield. Meanwhile its price-to-earnings ratio (P/E) — which measures its current share price relative to its earnings per share (EPS) — stands at eight. The figure, which is relatively low, could suggest the stock is cheap.
Despite this, there are some issues. Legal & General’s share price hasn’t been the most reliable source of growth on the FTSE 100 over the last decade. The stock is up only 2.75% over the last three years.
Barratt Developments
For me, housebuilders are a great place to look for stocks offering attractive dividend yields with some upside potential. Barratt Developments (LSE:BDEV) has a strong record of delivering attractive dividends and is currently offering 5.6% on the back of some positive performance data.
The Leicestershire-headquartered firm has maintained a health dividend coverage ratio, and for each of the last five years, with the exception of 2020, Barratt has paid out yields above 4%.
In 2021, pre-tax profit rose to £812.2m, buoyed by a strong UK property market, up from £491.8m in 2020. Barratt’s performance in 2021 was comparable with pre-pandemic figures.
What makes this stock even more attractive is that it’s trading at a near 30% discount compared with this time last year. I already hold it but would buy more.
Vistry Group
Vistry Group (LSE:VTY) is another housebuilder offering an attractive passive income opportunity. I can expect a 6.26% dividend yield if I buy now, a figure that rivals the current level of inflation. Moreover, Vistry has maintained a healthy dividend coverage ratio in recent years.
The firm reported “excellent progress” in 2021 with completions rising 23.7% to 11,080. Pre-tax profits for the period rose to £319.5m, exceeding pre-pandemic figures by some distance.
Like many other homebuilders, Vistry is currently trading at a discount despite the positive performance data. The cladding scandal, inflation and interest rate rises are all weighing on share prices in the sector.
