I do most of my investing through a Stocks and Shares ISA. Due to my personal tax situation, I believe it’s better to use this tax-efficient wrapper, despite its limitations.
However, that’s not going to be applicable for all investors. A traditional dealing account or even wealth management service might be more suitable for those with less experience. With that being the case, here are the five FTSE 250 UK shares I’d buy right now.
FTSE 250 shares
CMC Markets provides financial services for investors around the world. The company specialises in trading derivatives such as spread betting and contracts for difference. These products can be incredibly volatile, but that’s good news for CMC. The business makes a profit on every trade its customers place. That means volatility is good for business.
As such, as market volatility has exploded over the past 12 months, so has good profitability. That’s why I buy the stock, although CMC isn’t without risks. Previously, the organisation has had to book large losses when customers haven’t been able to come up with cash to cover losses. There’s no guarantee this won’t happen again. A significant loss may even jeopardise the firm’s financial position.
I’d also buy iron ore producer Ferrexpo. The price of iron ore has jumped over the past 12 months, which should benefit the group’s bottom line. However, this is a high-risk investment.
The company’s operations are located in Ukraine and, in the past, it’s been dogged by corporate governance issues. One of the firm’s banks also collapsed, wiping out a portion of its cash balance. Still, I’d buy the stock because it has a track record of producing large dividends for investors when profits surge. I think that potential reward is worth the risks of investing.
Stocks and Shares ISA investments
International estate agency Savills is another FTSE 250 business I’d buy for my Stocks and Shares ISA. Property is one of the world’s largest asset classes, and this group has a strong reputation globally for facilitating deals. Unfortunately, its reputation doesn’t make it immune to the property market’s cyclical nature. So, Savills is almost sure to encounter periods of falling profit. This could have a significant impact on the company’s share price.
Fund management can be a lucrative business, that’s why I’d buy UK shares such as Jupiter Fund Management. I like this company because it’s always paid a generous dividend. The stock currently supports a dividend yield of 5.8%.
However, Jupiter’s impressive dividend track record doesn’t guarantee the payout will always be there for investors. If profit margins should fall, the organisation may have to cut its distribution. If the firm’s funds underperform the market, it may spark a customer exodus, putting pressure on group profit.
The final FTSE 250 firm I’d buy is PZ Cussons. The maker of soaps such as Imperial Leather has reported a significant increase in sales this year. This profit growth should support its dividend yield, which currently stands at 2.6%. Still, this payout is by no means guaranteed. The company had to cut its dividend by 30% in 2020 due to falling profits, which could happen again in the future.
The post 5 FTSE 250 I’d buy for a Stocks and Shares ISA appeared first on The Motley Fool UK.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended PZ Cussons. 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 2021