There are a few excellent bullish traits when it comes to Stocks and Shares ISAs. One is the fact dividends received aren’t liable for tax. Plus, a generous £20k annual allowance is attractive.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

With the former in mind, it makes sense for me to buy and hold quality dividend stocks to help build wealth.

Two stocks I’d love to buy for my ISA when I next can are GSK (LSE: GSK) and Lloyds Banking Group (LSE: LLOY). Here’s why!

GSK

Pharmaceutical giant GSK looks like an attractive prospect to me for a few key reasons.

Firstly, I reckon the drugs and medicine creator possesses defensive attributes. This is due to the essential nature of its work to help cure the world’s diseases, including cancer and HIV.

Next, it possesses some pretty attractive fundamentals, in my view. The shares look decent value for money on a price-to-earnings ratio of 15. This is lower than average of recent years so now could be a great entry point.

Furthermore, a dividend yield of 3.9% is decent, and could potentially grow. This is because of GSK’s health research and development pipeline of future drugs and treatments, which looks solid. However, it is worth mentioning that dividends are never guaranteed.

From a bearish perspective, ongoing legal troubles with its Zantac drug, which could lead to huge financial implications, is a dark cloud hanging over it. I’ll keep an eye on developments. However, this is a risk for all pharma stocks.

Overall, a track record of success in its field, dominant market position, shareholder value, and attractive fundamentals make GSK a no-brainer for me.

Lloyds Banking Group

As one of the so-called ‘big four’ banks in the UK, Lloyds possesses a vital position in the banking ecosystem in the country.

From a bearish view, new kids on the block and industry disruptors such as Monzo and Metro Bank are threatening to upset the status quo of the banking sector. They’re working hard on aspects like customer satisfaction, and offering customers an alternative. Dwindling market share could hamper Lloyds moving forward. In addition to this, economic volatility isn’t good news. For example, higher interest rates and mortgage costs could lead to loan defaults. This could hurt Lloyds bottom line and shareholder returns.

Moving to the other side of the coin, Lloyds is the largest mortgage provider in the UK. This could be a future money spinner for the business as demand for homes is outstripping supply. It could leverage its dominant market position into boosted earnings and hopefully pass this on to its shareholders.

Speaking of returns, Lloyds shares currently offer a dividend yield of 5%. Plus, the shares look great value for money on a price-to-earnings ratio of just eight.

Although economic volatility is currently rife, Lloyds’s track record, market position, and returns prospects make it a stock worth buying for me and my holdings.

The post 2 FTSE stocks I’d stick in my Stocks and Shares ISA for the long haul appeared first on The Twelfth Magpie.

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Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended GSK and Lloyds Banking Group Plc. 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.

I believe there are plenty of quality UK shares that perhaps go under the radar due to a lack of brand power or name recognition.

Two picks I reckon investors should consider buying are Topps Tiles (LSE: TPT) and Michelmersh Brick Holdings (LSE: MBH). Here’s why!

Tiling giant

Topps Tiles is one of the leading tile and flooring firms in the country. It possesses a vast physical presence as well as a long track record. However, it still trades as a small-cap stock.

From a bullish view, it’s hard to ignore Topps’ track record, longevity, and leading market position. This could help the stock provide good shareholder value over time. Plus, the business has moved with the times as shopping has evolved. A prime example of this is its online offering to cater for changing shopping habits.

Looking to the future, Topps is in a great position to benefit from interest rate cuts and the growing demand for housing. New and renovated homes need tiles and flooring. Topps can utilise its advantageous market position to grow performance and returns here.

Finally, a dividend yield of 8% looks attractive. However, it has been pushed up by a falling share price linked to economic volatility. Although payment coverage doesn’t look like an issue at present, it’s worth remembering that dividends are never guaranteed.

Reviewing the bear case, the e-commerce boom has welcomed unwanted competitors to Topps’ door. It must navigate higher overheads, such as rental expenses, and this could impact pricing power. Losing market share could hurt performance and returns. Another issue is that of economic volatility – like now – which could mean consumers have less money to spend on home renovation projects.

Despite some potential issues, Topps is a solid business with a good track record and attractive fundamentals.

Bricks and mortar

Michelmersh is a bricks, roofing tiles, and construction products manufacturer.

A big plus point for Michelmersh is the fact it manufactures its own products. This is from its own site in Telford. This can help control costs, as well as quality levels.

Moving on, demand for bricks and construction aggregates could soar in the coming years. This is linked to infrastructure demand increasing in line with a growing population.

Furthermore, demand for homes is outstripping supply. This shortfall needs to be addressed. All of these aspects could translate into boosted performance and returns for Michelmersh shareholders.

From a fundamentals view, the shares offer a solid dividend yield of 4.5%. In addition to this, the shares look decent value for money as they trade on a price-to-earnings ratio of 11.

Taking a look at risks, inflation could hinder Michelmersh as increased costs of raw materials could drive up operating costs. This could mean the firm must increase prices and risk losing customers, which could put its margins under pressure.

Another concern is economic volatility. It could hamper the property market — a bit like now — as well as infrastructure projects being delayed, or even cancelled.

Michelmersh may not possess a powerful brand name or wide reach. However, it has good fundamentals, and bright prospects for the future too.

The post 2 quality small-cap UK shares investors should consider buying appeared first on The Twelfth Magpie.

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Sumayya Mansoor has positions in Topps Tiles Plc. The Motley Fool UK has no position in any of the shares mentioned. 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.

My job is my primary income source but I believe I could create a second income to enjoy in retirement through investing smartly.

Here’s how I would try to do it.

Steps I’d follow

The first thing I need to do is put in place an investment vehicle. I reckon a Stocks and Shares ISA is the best one for me. This is due to favourable tax implications on dividends received, and a generous £20k allowance per year.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Next, I need to do the hardest part, which is stock picking. In order to mitigate risk, I’ll diversify my pot of stocks. Plus, I’ll look to ensure I buy stocks that I believe I understand, and have lots of information readily available for me to review.

Quick maths

Let’s say I had £20k saved from my earnings. I’d put this to work to help me build my additional income.

Investing this into my ISA, buying the best dividend stocks, and aiming for an 8% rate of return, after 25 years I’d be left with £146,803. This is due to the magic of compounding.

In order for me to enjoy this, I’d draw down 6% annually, and split this into weekly amounts, which equals to £225.

Pitfalls

The above sounds great in theory but there are potential bumps in the road. The first one is that dividends are never guaranteed.

Moving on, each stock I buy possesses its own risks, which could dampen performance and shareholder returns.

Finally, I may not achieve my target yield of 8%. If I achieve less, I’ll have less money to draw down from and enjoy. Conversely, I may yield more, boosting my additional income amount.

One stock I’d buy

The City of London Investment Trust (LSE: CTY) is one pick I’d buy to help me achieve my aims if I was following this plan starting today. In fact, I’d love to be able to buy the shares as part of my existing holdings when I have the funds to do so.

The investment trust is made up of some of the best blue-chip stocks under one umbrella. Its aim is to outperform the FTSE index and provide shareholder value. Some of the stocks the trust holds positions in are HSBC, Shell, and Unilever.

From a returns perspective, City of London Investment Trust is a Dividend Aristocrat. It’s achieved this esteemed position due to increasing its annual dividend for 57 years straight! However it’s worth mentioning the past isn’t always a guarantee of the future.

Coming up to date, a dividend yield of close to 5% is attractive. Plus, I can see this growing too if the trust continues in the same vein.

Finally, having access to the best UK shares in one pot is a great way to mitigate risk, as diversification offers this in abundance.

From a bearish view, overexposure to British-based stocks could present a problem in the future. Economic turbulence or a market crash could have a material impact on the trust’s performance and shareholder returns.

Overall I reckon the City of London Investment Trust could help me bag consistent returns, and build an additional income stream.

The post £20k tucked away? I’d try to turn that into a second income worth £225 a week! appeared first on The Twelfth Magpie.

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Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Growth shares could help boost my wealth and holdings for years to come. With that in mind, one stock I’m planning on adding to my holdings when I next can is Intertek Group (LSE: ITRK).

Let me break down my investment case.

Testing, safety, and certification

It’s fair to say Intertek isn’t a name that immediately stands out on the UK’s premier index among its illustrious and prestigious incumbents. Nevertheless, a lack of fanfare or brand recognition doesn’t make the testing and safety business any less of an intriguing investment prospect.

Intertek shares have had a fantastic 12-month period. They’re up 24% from 4,061p at this time last year, to current levels of 5,060p.

The bull case

I reckon Intertek possesses defensive attributes. This is because of the essential nature of the work it does. Think of all the consumer products we use on a day-to-day basis, including the laptop I’m typing on, to the desk it’s sitting on. Everything needs to be tested to regulatory standards, and signed off with the relevant certification. This is Intertek’s bread and butter, and it’s made a good business out of it.

Next, Intertek’s not only made a name for itself, but it’s become a world leader in this field. It currently operates approximately 300 laboratories across the world. Plus, results speak for themselves as the business has an excellent track record of performance. However, I do understand the past isn’t a guarantee of the future.

Looking to the future, there’s great growth potential for Intertek as the world continues to grow, and day-to-day living evolves. This simply means there’s more products available, and more for Intertek to test and make money from. Hopefully it’ll continue returning this to its shareholders.

Speaking of returns, a dividend yield of 2.5% is decent at present. Plus, I can see this growing. However, I do understand that dividends are never guaranteed.

Finally, the shares actually look decent value for money despite a market-leading position, and established name and track record. They currently trade on a price-to-earnings ratio of 19. This is no value stock, but, I think this looks like a fair price for an established business with growth prospects and defensive traits.

Risks and final thoughts

From a bearish view, a significant risk that applies to most industries and firms, and not only Intertek, is economic turbulence. A slowdown could halt Intertek’s growth aspirations and could even dent performance and returns.

Economic issues in China – one of the world’s largest hubs for new consumer products – is a prime example of this risk, and something I’ll keep an eye on. Another example of this occurred when the pandemic struck, and the business was impacted for a short period.

Overall I’m buoyed by Intertek as an established business with a good track record and attractive fundamentals. Furthermore, exciting growth prospects mean now could be a great time for me to buy shares at a decent entry point.

The post Looking for growth shares? I like this underrated FTSE 100 stock! appeared first on The Twelfth Magpie.

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Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Intertek Group Plc. 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.

I reckon it’s entirely possible to create a passive income stream by buying dividend stocks, and letting compounding work its magic. Let me explain how I’d approach this challenge.

Kicking things off

Firstly, I’d open a Stocks and Shares ISA due to the favourable tax implications on dividends received. I’m going to need this due to dividends being the bedrock of building my pot of money.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Next, I need to pick the best stocks to help me bag returns. I’m going to diversify my holdings to mitigate risk. More crucially, I’ll ensure I look for the most consistent returns from blue-chip names I understand and can get to grips with.

Crunching some numbers, let’s say I have £10K to get the ball rolling towards a healthy pot at the end. I also want to add to this regularly to maximise my end sum of money, so I will commit £250 per month from my wages.

Using all this, in my ISA, invested into the best dividend shares, and aiming for a return of 8%, would leave me with £311,158 after 25 years.

Finally, I’d draw down 6% annually, leaving me with £18,669 to spend how I like.

Risks I’m wary of

The first issue is a biggie, which is that dividends are never guaranteed. They can be cut or cancelled to conserve cash.

Next, each individual stock comes with its own risks I must carefully assess and be aware of. This is because performance and returns could be impacted.

Finally, although I’m aiming for an 8% rate of return, I could end up with less if the stocks I buy yield less. This would leave me with less in my pot to draw down from and enjoy. Conversely, I could yield more and earn more.

Stock picking

If I was following this plan today, I’d buy ITV (LSE: ITV) shares for juicy returns.

Now you might be wondering how a legacy television broadcasting business could be a good pick for returns for years to come. Yes, I’m aware of the threat of streaming giants grabbing market share as the way consumers watch content has changed. Plus, I do understand that advertising spend is under pressure, and this is one of the main money spinners for firms like ITV. I’m aware of these ongoing risks.

However, there’s lots to like about ITV, in my view. To start with, its own streaming platform, ITVX, is growing in popularity, after extensive investment from the business.

More crucially, the firm’s production arm, ITV Studios, is hugely popular and has churned out many successful hits such as Love Island and I’m a Celebrity. If it can continue in this vein, both of these aspects could catapult ITV’s performance to new heights, and offer generous returns in the future.

Finally, once economic volatility dissipates, advertising revenue could rise once more, boosting the firm’s bottom line.

Moving over to fundamentals, ITV shares offer an enticing dividend yield of over 6%. Furthermore, the shares look fantastic value for money right now on a price-to-earnings ratio of close to eight.

The post Here’s how I’d create a passive income stream worth over £18K annually appeared first on The Twelfth Magpie.

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Sumayya Mansoor has no position in any of the shares mentioned. 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.

FTSE 100 incumbent LondonMetric Property (LSE: LMP) looks like it has all the hallmarks to become a potential future Dividend Aristocrat, in my eyes.

Here’s the thinking behind my assertion, as well as why I’d love to buy some shares when I next can.

Diversified property

You might have already guessed from the name but LondonMetric makes money from diversified property assets. From a returns view, it’s set up as a real estate investment trust (REIT). This is a huge plus, as it means that the business must return 90% of profits to shareholders.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

LondonMetric shares have risen 16% in the past 12 months from 175p at this time last year, to current levels of 204p.

My investment case

First off, I’m a big fan of LondonMetric’s business model. In most cases, REITs tend to focus on one type of property. LondonMetric possesses a diversified range of assets, which can help offer protection against a downturn in one area. Plus, it’s capitalising on popular trends to grow profits and hopefully returns. A prime example of this is its exposure to logistics facilities in the wake of the e-commerce boom.

Furthermore, it understands market trends. For example, it is moving away from office space as working from home trends have risen since the pandemic. Plus, a recent acquisition has given it access to defensive properties such as hospitals, which will give it good earnings visibility as demand for hospitals isn’t going to slow down.

Another aspect I like about LondonMetric’s modus operandi is targeting assets with long-term tenants for growth. These tenants are tied down to long-term agreements, and are less likely to default on rent payments.

Moving on, LondonMetric’s recent updates have confirmed its operating with a 99% occupancy rate, which is impressive, if you ask me.

Looking at returns, the shares offer a dividend yield of 5.2%. For context, the FTSE 100 average is 3.6%. However, I do understand that dividends are never guaranteed.

Finally, LondonMetric has a great track record of payouts, and has increased these for the past nine years in a row. However, I do understand that the past isn’t a guarantee of the future. If it can continue in this vein, I can certainly see it becoming a top dividend stock in the future.

Risks and my verdict

The biggest risk I’m concerned about right now for LondonMetric is debt levels. These can be trickier to manage during higher interest environments, like now. Plus, debt repayments can take precedence over growth and returns initiatives, so I’ll be watching with interest. However, it is worth noting the debt ratio compared to payout coverage on its balance sheet isn’t a concern, not yet at least.

A smaller concern is the firm’s propensity for acquisitions. They’re great when they work out, but can be damaging from a financial and investor sentiment perspective when they don’t.

Overall, I reckon LondonMetric could be a fantastic stock to buy for returns and growth. A diverse range of assets, defensive traits, and a good track record help my investment case.

The post I reckon this FTSE 100 stock could eventually become a Dividend Aristocrat appeared first on The Twelfth Magpie.

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Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended LondonMetric Property Plc. 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.

The last time I reviewed FTSE 250 incumbent Domino’s Pizza (LSE: DOM) at the beginning of the year things were going well.

It’s fair to say the goalposts have shifted somewhat since then. Is one of the most shorted stocks around an opportunity or one for me to avoid? Let’s take a closer look.

Tough 2024

Domino’s is the UK’s premier pizza delivery business and it owns the master franchise in this region for the global business.

It’s been a tricky 2024 to date, and I reckon this is reflected in the share price activity. Over a 12-month period, the shares are down 21% from 378p at this time last year, to current levels of 274p.

I reckon this is a direct consequence of economic volatility, which has prompted a cost-of-living crisis. Consumers are battling higher living costs such as food, energy, and rent or mortgage costs. Less money to spend on extras such as takeaways has impacted the business as well as investor sentiment. It’s worth noting that this is an ongoing risk I’ll be keeping an eye on.

Another risk I reckon is certainly worth noting is that of changing consumer habits. The spotlight on health consciousness and healthier food is certainly something that could hurt fast food firms like Domino’s in the longer term.

The good stuff

Enough of the negativity, and on to the good bits, and there’s plenty of them, in my view at least.

Kicking things off, it’s hard to ignore the returns Domino’s shares have presented to savvy investors who got in early. I wish I was one of them! For example, in 2004, shares were trading for close to 21p, so those who bought in then will be laughing all the way to the bank.

Furthermore, in this period, Domino’s has paid a dividend for each year, which is an impressive feat. At present, a dividend yield of 3.8% is decent. However, it’s worth noting that dividends are never guaranteed, and that the past isn’t a guarantee of the future.

A big reason for Domino’s past impressive achievements is due to its strong brand power, reputation for quality, and wide presence. The latter is something that continues to grow today, especially through its savvy franchising model which means it can grow and maintain quality standards.

More crucially, the business has a great level of profitability with low overheads and high margins. The proof is in the pudding when I consider that the business averaged 30% return on capital employed in the past five years.

To buy or not to buy?

For me, I reckon the pros outweigh the cons, and by some distance. Recent economic turbulence has hindered the share price. However, I believe it’s offered a better entry point for potential investors like me. The shares currently trade on a price-to-earnings ratio of 14. This is good value for money for an established business with a fantastic track record and brand power.

I’d be willing to buy some shares when I next have some free cash to invest.

The post Is this FTSE 250 stock a delicious opportunity or one to avoid? appeared first on The Twelfth Magpie.

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Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Domino's Pizza Group Plc. 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.

One of the best dividend shares on the UK’s premier index is Aviva (LSE: AV.), in my humble opinion. Here’s why I reckon it could be a top-notch stock to help build wealth in my portfolio, and why I would love to buy some shares when I next can.

Five reasons I like Aviva shares

When looking for dividend stocks, I look for key criteria to be met in order to aid my investment case.

• Market standing. In an ideal world, I prefer the stock in question to be a market leader. This is certainly the case for insurance giant Aviva, with its more than £13bn market cap. It’s one of the largest and best-known insurance businesses in the UK. Plus, it has excellent coverage with an international presence too.
• Performance and payout track record. I’ll start by stating the obvious, which is that the past is never a guarantee of the future. However, I’d much rather buy shares in a firm that possesses a good track record of improving performance and consistently rewarding shareholders. This track record offers me insight into a firm’s priorities and ability to perform. Aviva ticks this box too.
• Rate of return. This is crucial for me, personally, and at present, Aviva shares offer a dividend yield of 7%. For context, the FTSE 100 average is around 3.6%. Although I understand that dividends are never guaranteed, I’m interested in building wealth through consistent dividends. Plus, I need to be wary of ultra high yields which could be a sign that a business is in trouble if the share price falls off a cliff, for example.
• Share price activity. As the chart below shows, Aviva shares have been on a good run. So first off, the higher-than-average yield isn’t a sign of trouble. Over a 12-month period, the shares have risen 24% from 394p at this time last year, to current levels of 492p.
• Valuation. I’ll be the first to admit I love a bargain. However, at the same time, I’ve no qualms about paying a fair price for quality. Luckily for me, Aviva shares fall into the first category. They trade on a price-to-earnings ratio of just 10, which I consider to be great value for money.

Risks and final thoughts

My first concern is that of intense competition in the financial services sector. Some of Aviva’s largest competitors include other FTSE 100 giants such as Legal & General. This competition could have an impact on performance and returns.

Another issue is that of economic volatility, which could hinder performance. For example, when consumers are battling higher living costs, they could turn away from financial planning products. This is because being worried about the present makes it harder to think about planning for the future. This could dent earnings and returns for Aviva.

Overall, for me, the pros outweigh the cons by some distance when it comes to Aviva as a top dividend stock. There’s lots to like about Aviva shares and I reckon the shares could help me build wealth through consistent dividends, as well as capital growth.

The post I reckon this is one of the best dividend shares on the FTSE 100! appeared first on The Twelfth Magpie.

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Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

The PZ Cussons (LSE: PZC) share price has been on a downward trajectory for some time now, placing it in value stock territory.

Let’s examine what’s happened and whether there’s a buying opportunity for me.

Cleaning house!

PZ Cussons is best known for its cleaning and hygiene products with approximately 30 brands. Some of these include Imperial Leather, Carex, and more.

Over a 12-month period, the shares are down 44% from 160p at this time last year, to current levels of 89p.

Recent issues and trading

PZ Cussons released a full-year update for the period May 2023 to May 2024 last week. On the surface of things, it didn’t look great. The headline for me was that underperformance was primarily due to issues with African currency, the Nigerian naira, to be exact. Currency conversions can impact trading updates when recorded in a local currency, and this is a prime example.

Digging deeper, the business still recorded a healthy profit after tax of over £44m. Furthermore, managed to aid its balance sheet by reducing debt levels from £251m last year, to £167m in this update. If PZ’s African business is excluded from the report, like-for-like revenue only fell 2.6%, which isn’t bad considering economic volatility globally.

The market didn’t react well when the news emerged, and the shares dropped close to 15% on the day. Personally, I think this was an overreaction.

To buy or not to buy?

From a future perspective, the firm’s management team are looking at two possible solutions. The first one is the sale of the African business totally. Another is to deal in US dollars as much as possible, as this is a much less volatile currency globally. From a risk perspective, if either of these things don’t happen, I wouldn’t be surprised to see PZ Cussons’ updates look similar to the one of last week.

Another issue I’m concerned about is that of PZ’s premium brands. During times of volatility like now, consumers can move away from branded goods towards non-branded essential ranges to conserve cash. This could impact performance and returns moving forward.

On the other side of the coin, it’s worth noting PZ Cussons’ does possess defensive attributes, in my view. This is because its products are consumer staples. Everyone needs to clean their homes and themselves! Defensive ability could help the business recover from recent issues.

Next, the shares do offer a dividend yield of over 5% at present. I must note that this has been pushed up by a falling share price. Plus, dividends are never guaranteed.

Finally, top brokers Deutsche Bank have given PZ Cussons a ‘buy’ rating, and a price target of 130p. This is a potential 46% increase from current levels. However, I’ll always take broker forecasts with a pinch of salt.

What I’m doing now

Personally I’m not going to buy any shares until I see some tangible movement to address the issues the firm has had in Africa. This includes a sale of the business or better currency management options.

I like the business, especially its defensive traits and track record, so I’ll keep a close eye on things.

The post This value stock is down 44% in a year! Should I buy the dip? appeared first on The Twelfth Magpie.

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Sumayya Mansoor has no position in any of the shares 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.

I believe it’s entirely possible to create a second income through investing in FTSE stocks.

I’d follow some specific steps to achieve this, which I’ll break down below.

Simple approach

No one likes complications, and I’m the same, especially when it comes to investing. With that in mind, I’ll adopt a simple strategy when it comes to my investment vehicle of choice and stock picking.

I’ll open a Stocks and Shares ISA. This is because of the favourable tax implications, as well as generous £20K annual allowance.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Next, I’m going to buy stocks in this ISA that I believe are blue chips and industry leaders. Furthermore, I’m going to diversify my pot of stocks as this is a great way to mitigate risk.

Risks for me to consider

As I’m investing in dividend stocks, I must remember that dividends are never guaranteed.

Next, each individual stock comes with its own risks that could dent performance and returns. I need to consider these for all the stocks I decide to buy.

Finally, I’ve got a monetary target and yield in mind. However, if I earn less than my target yield, this will impact how much of additional income I can create.

Quick maths

If I had £15k to spare today, I’d put it all into my ISA with a view to buying dividend stocks. I’m going to follow my plan for 30 years, and aim for an 8% rate of return.

The magic of compounding will help turn my £15k into £462,107 after 30 years. The next step is to draw down 6% annually, and split this into weekly chunks, which equates to £530 per week.

Stock picking

One stock I’d buy if I were following this plan would be Legal & General (LSE: LGEN).

The FTSE 100 financial services powerhouse deals in financial planning and retirement products. As well as vast experience and wide coverage, the business has a good track record of performance and returns. However, I do understand that the past isn’t any form of guarantee of the future.

What I like about Legal & General’s modus operandi is the fact it operates in a burgeoning sector. The demand for retirement and financial planning products is only rising, in line with an ageing population. Furthermore, when consumers invest in such products, they are often long-term products. This can help Legal & General perform well with good earnings visibility.

From a bearish view, economic turbulence can be a worry for a couple of reasons. Firstly, during tougher times, consumers may spend less on non-essential products such as future financial products as they’re battling a cost-of-living crisis. This can hurt performance and payouts. Furthermore, if the economic picture gets really bad, dividends can be cut. Legal did this during the financial crash of 2008.

Moving back to the other side of the coin, Legal & General’s fundamentals look good to me. The cherry on top is a mighty dividend yield of 9% at present. For context, this is higher than my 8% target as outlined above.

The post £15k in savings? I could turn that into a second income worth £530 per week appeared first on The Twelfth Magpie.

More reading

• Just 9% of us can expect a ‘comfortable’ retirement! Could UK shares be the answer?
• 3 passive income shares to consider buying for a 7% yield
• How much would you need in an ISA to match the new State Pension and get another £12,547 a year?
• Here’s why Legal & General is still one of the UK’s most popular SIPP buys
• How have Legal & General shares become a dividend powerhouse? 5 reasons why!

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.