It is less than three weeks since Vladimir Putin invaded Ukraine but it already seems a lifetime ago. The human cost is almost beyond words. The cost to our economy and our standard of living is still hard to gauge.
Financial markets have been gyrating wildly and will probably continue in that vein while Putin continues his barbaric assault on Russia’s neighbour. Not an easy time, then, to think about investing in an equity Isa.
But, as history proves, shares are a rewarding long-term home for your money, and the best time to buy is often when everyone else is running scared. Certain stocks have proved themselves over time. Others are newer to the market but have great prospects.
Powering ahead: As history proves, shares are a rewarding long-term home for your money, and the best time to buy is often when everyone else is running scared
Whatever happens in the wider world, people have to eat and more customers shop at Tesco than any other UK grocer.
The company has a 28 per cent share of the country’s grocery market, almost double that of its nearest rival Sainsbury’s, and more than three times that of the German discounters Aldi and Lidl. Size matters in food retailing.
As the biggest player in the UK, Tesco can impose its muscle on suppliers, from farmers to bakers to ready-meal makers. That does not mean the company is bullet-proof against the twin forces of high inflation and low economic growth, but if consumers start to rein in their spending, Tesco will be better placed than most to manage, survive and ultimately thrive.
Brokers expect steady growth in sales, profits and dividends over the next three years, including a 9.5p dividend payout for the 12 months to February 28, 2022, rising to 11.3p in the current year.
Midas verdict: My mother inherited Tesco shares from her father, who bought them in the 1970s. Throughout the company’s ups and downs, she kept the faith, reinvested the dividends and today they are worth many times what they were all those years ago. What better gauge of an Isa stock? At £2.73, the shares are a buy.
Traded on: Main market Ticker: TSCO Contact: tescoplc.com or 0330 123 9928
When the going gets tough, investors seek out safe, low-risk businesses paying juicy dividends and run by managers who know their game.
HICL ticks all those boxes and then some. It may not be a household name but one in four of us interact with the business every day, because HICL owns hospitals, schools, roads, police stations and prisons across the country, as well as the HS1 railway from St Pancras to Kent and Affinity Water, supplying 3.6million customers in the SouthEast.
Even the Home Office is part of HICL’s portfolio, with the group owning Priti Patel’s nattily designed building in Westminster and making sure it is kept in good condition.
HICL also has a growing interest in the cables that connect massive offshore wind turbines to the mainland and it owns buildings, roads and railways in Europe and America too. In almost every case, HICL’s ultimate customers are governments, with contracts stretching out for decades and most linked to inflation. The group chooses its assets with care, focusing on those which provide essential services, from water to medical care to transport.
This approach means generous dividends can be paid out through thick and thin. And the proof lies in HICL’s track record – delivering increased payouts every year since floating on the stock market in 2006 and paying shareholders every quarter too.
Midas verdict: HICL has grown steadily over the past 15 years and should continue to do so. Dividends of more than 8p are forecast for this year and next, putting the stock on an attractive yield of about 4.75 per cent. At £1.72, the shares are ideal for your Isa.
Traded on: Main market Ticker: HICL Contact: hicl.com or 020 3818 0246
Coats is one of the oldest firms in the UK, tracing its roots back to 1750, when George II was on the throne.
Today, Coats is the largest producer of thread in the world and the second largest supplier of zips, with 17,000 employees and a well-deserved reputation for quality and service.
Top customers include Adidas, Nike, Lululemon, Gap and Uniqlo, so its products can be found in the trainers, tracksuits and trendy gear worn by millions of consumers worldwide.
Clothing and footwear account for nearly three-quarters of group sales but Coats has a fast-growing industry-focused division too, making goods such as flame-retardant thread for firefighter uniforms and even the US military.
Results earlier this month showed the company to be winning business at pace, with sales up nearly 30 per cent to $1.5billion (£1.15billion), profits soaring 75 per cent to $193million and a dividend of 2.1 cents or 1.6p once it is converted into sterling.
Further strong growth is predicted, as the group is constantly inventing new and better products, including eco-friendly threads that really appeal to big, multinational brands.
Midas verdict: Coats has been a pioneer in its field for centuries and continues to lead the way, with strong, sleek and sustainable wares that appeal to big companies and consumers alike. At 69p, the shares have real long-term potential. Buy.
Traded on: Main market Ticker: COA Contact: coats.com or 020 8210 5000
Direct Line was listed on the stock market in 2012 and has increased its dividend ever since.
Only last week, the insurer unveiled robust profits for 2021, alongside a total dividend of 22.7p. The payout was 2.7 per cent higher than in 2020 and brokers forecast further gains for the foreseeable future.
This makes Direct Line one of the most generous firms on the stock market. With the shares at £2.66, the stock is yielding more than 8.5 per cent – and the firm pays regular special dividends too.
The group insures motorists, homeowners and businesses under its own name, as well as the Churchill and Privilege brands.
Green Flag, the rescue service, is part of the stable too, and chief executive Penny James has set up partnerships with NatWest and Motability, which provides cars for disabled drivers.
The firm also owns a chain of garages, which allows it to repair cars faster and more cheaply than most rivals, particularly useful when parts and labour costs are rising.
Midas verdict: Insurance is a cut-throat business and many firms are keen to attract customers at any cost. Direct Line is different, looking for value rather than volume. At times, this has held back sales but a new IT system means that the group can be much more competitive than in the past and prospects are bright. At £2.66, the shares should deliver long-term gains and the dividend adds an extra flourish.
Traded on: Main market Ticker: DLG Contact: directlinegroup.co.uk or 0370 873 5880
Self-Storage group Lok’n’Store was founded in 1995 and has grown consistently ever since, under the watchful eye of founder Andrew Jacobs. Further growth seems assured. The company has 38 self-storage sites scattered across southern England but another 17 are expected to come onstream over the next couple of years, with more space actively under review.
This ambitious pipeline reflects rising demand for self-storage, ranging from individuals with too many belongings, to businesses, holding stock to withstand supply shortages.
In the six months to January 31, 2022, Lok’n’Store managed to increase both prices and occupancy, and brokers are optimistic about the future.
Notwithstanding today’s uncertain outlook, sales and profits are forecast to deliver double-digit growth for the year to July, holding steady thereafter.
Importantly for investors, Lok’n’Store has also increased its dividend every year since 2007 and is expected to pay a 17p dividend this year, rising to 19p next year and 21.5p in 2023.
Midas verdict: At £9.20, Lok’n’Store has tripled in value since Midas first tipped the shares in 2015. The price should continue to rise as the company expands. Jacobs’ position as a 19 per cent shareholder offers further reassurance for Isa investors.
Traded on: AIM Ticker: LOK Contact: loknstoreco.uk or 01252 521010
Take a look at specs maker Inspecs
Inspecs is a relative newcomer to the stock market, joining AIM in February 2020, just weeks before the UK went into lockdown. But the company was established back in the 1980s, when long-sighted founder Robin Totterman could not find a pair of glasses he liked.
Today, Inspecs designs and makes millions of frames and lenses, and sells them to more than 70,000 opticians and retailers around the world, from individual shops in local high streets to large chains such as Specsavers over here, Walmart in America, and Asos online. Spectacles are made under well-known fashion brands, including Superdry, Marc O’Polo and Lulu Guinness, but Inspecs has several of its own labels too, such as Botaniq, whose models are made from biodegradable and recycled materials.
Totterman has done well since bringing his business to market. He has made some clever acquisitions, invested in a state-of-the-art lens-making facility in Gloucestershire, expanded overseas and developed an ecommerce site as well.
Results for 2021 will be announced soon and brokers forecast profits of more than $19.5million (£15million), rising to nearly $25million in the current year.
A maiden dividend of 1 cent (0.75p) should accompany the 2021 figures, with 2.5 cents pencilled in for this year and 4 cents for 2023. Even though the company reports in dollars, dividends will be paid in pounds and pence to UK shareholders.
The Bath-based group has twice won the Queen’s Award for Enterprise and, encouragingly, it is chaired by Lord Ian MacLaurin, who is credited with turning Tesco into the UK’s largest retailer in the 1980s and 90s.
Midas verdict: More than 4 billion people across the world need glasses, numbers are growing all the time and opticians recommend that everyone wears shades when the sun is shining. Inspecs is one of the only companies that designs, makes and sells glasses, from luxury models to cheap and cheerful readers. At £3.30, the shares should go far. Buy and keep.
Traded on: AIM Ticker: SPEC Contact: inspecs.com or 01225 717000
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