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We only got our brand new 2024 Stocks and Shares ISA allowance just over a month ago. But already, the most popular shares are starting to shape up.
Those depressed financial stocks are looking more popular than last year. In particular, M&G (LSE: MNG) is climbing high up the list with ISA providers.
That must be partly due to its big dividend forecast, with a 9.5% yield. It was above 10% earlier, but the share price has been gaining in May.
Investment strength
M&G is in the savings and investment business. So, we’d expect it to do well when the stock market is booming, and less well when it isn’t. And to have a really tough time when inflation and interest rates are squeezing investors’ pockets painfully.
But, broker forecasts are starting to look up now. And it seems investors are getting back on board.
Analysts expect earnings growth to kick off strongly in 2024, and the dividend yield to get back to 10% by 2025.
Banks in fashion
Lloyds Banking Group (LSE: LLOY) is rising among the ISA favourites too. You know, the one the big investors have been shunning for years, but that has been popular with contrarian private investors.
Lloyds shares have been doing well in 2024, and the forward dividend yield is now a modest 5%. There’s still pressure on the banks, though. And weak forecasts for economic growth could keep the financial sector down for some time.
But for investors convinced that FTSE 100 banks will always have a good long-term future and are just waiting for a recovery to be confirmed… why wait?
I’d always consider buying my favourite stocks when I think the uncertainty is at its worst, when the shares can be very cheap.
Insurance is back
It’s good to see insurers like Legal & General growing in popularity this year. It can be a very cyclical sector. Insurance stocks can be among the most volatile, and they can be hammered in tough times.
If I bought some today, I’d expect to see share price fall next time there’s a stock market slump. And that’s why I reckon it’s extra important to get the valuation right.
And it’s a sector I really would only buy into for the very long term, to boost my chance of eventually being able to sell high.
Old favourites
I also see Rolls-Royce Holdings still among the top ISA buys so far in 2024. After the huge gains of the past two years, I might have expected many to sell off and move on to someting new.
But it seems people still expect more to come from Rolls in the coming years. They might be right, but the risk looks higher now.
Vodafone still seems like a big ISA buy, even though its big dividend is set to be halved in 2025. The 10% on the cards for this year did look unsustainable to me. But the latest move seems sensible, and it’ll be interesting to see if it remains a favourite.
