2 UK stocks I’d invest in with a spare £500
It is less than a couple of months before the end of the current tax year. That means I am thinking about how to invest my Stocks and Shares ISA. If I had a spare £500 to invest today, I would be happy to spend it on the two UK stocks below.
I already own broadcaster and media production company ITV (LSE: ITV) in my ISA. I would gladly use a spare £250 to add more shares to my position.
Over the past 12 months, the shares have lost 24% of their value. But that does not tell the whole story. Last March the company’s announcement of a new digital platform went down like a lead bomb in the City. But lately the shares have been climbing strongly, adding 60% since the end of September.
Even after that rise, they still trade on a price-to-earnings ratio of under eight. They have a 5.8% dividend yield to boot. I see that as attractive.
The ongoing shift to digital viewing remains a risk, though. Developing the platform (which has now launched, as ITVX) has been costly. Its long-term success remains uncertain, though initial takeup has been promising.
Meanwhile, digital competition may well lead to long-term advertising revenue decline at ITV’s legacy broadcast operations.
Overall, though, I see the firm as doing a good job of juggling present and future customer needs. It also has a studio and production business that is growing strongly thanks to demand from other broadcasters for original content to broadcast.
City of London Investment Trust
Another name on the list of UK stocks I would happily add to my ISA is City of London Investment Trust (LSE: CTY).
The attraction for me here is that, with a single purchase, I would gain exposure to a diversified range of mainly large, multinational UK stocks such as British American Tobacco, Shell, and Diageo.
According to its managers, the trust has “a conservative management style that prioritises sustainable income and long-term capital growth”. Its sizeable holding of London-listed multinationals means investors can benefit from global opportunities even though the portfolio consists mainly of UK stocks.
That approach is delivering for shareholders. Last week the trust raised its annual dividend for the 57th year in a row. The shares yield 4.7%.
Such a stellar record does have a downside, though. Unusually for an investment trust, City of London trades at a slight premium to its net asset value.
There are risks, too. The focus on UK stocks means changes in exchange rates can affect the size of companies’ overseas profits when converted into pounds. As a generalist investment trust, if the stock market overall performs weakly, there would likely also be a negative impact for City of London.
On balance, though, I like the approach and income potential of the trust. I would be happy to buy it for my ISA.
The post 2 UK stocks I’d invest in with a spare £500 appeared first on The Motley Fool UK.
C Ruane has positions in ITV. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2023