Taking a long-term view can make it surprisingly lucrative.

For example, on a 30-year timeline, a £20k ISA could produce £574 per month of passive income. That totals £6,892 per year – equivalent to over one-third of the initial investment, every year.

Here’s how.

Being ambitious but realistic when setting goals

That assumption is based on a compound annual growth rate of 6% for 30 years, after which it presumes a 6% dividend yield from the ISA.

Is 6% achievable? I think the answer is yes, even while sticking to proven blue-chip shares.

Thirty years is a long-term time horizon, so will likely include both good and bad periods in the market – potentially prolonged ones.

The compound annual gain includes not only any dividends but also capital gains. However, capital losses could eat into it.

Another factor is fees, commissions, and other charges. Over the decades even small-seeming costs can add up and badly eat into returns, so it makes sense to spend some time comparing options when choosing a Stocks and Shares ISA.

On the hunt for an 6% compound annual gain opportunity!

Even in the short run but especially in the long run, an investor will have to face some disappointments.

That is why it is important to keep an ISA properly diversified. That is simple to do with a £20k ISA, which could comfortably be spread over five to 10 different shares.

So the 6% target is a team effort. Not all shares need to do that well, as long as others in the portfolio make up for it.

One share I think is worth considering now for its long-term potential is FTSE 100 Twinings blender Associated British Foods (LSE: ABF).

Long-term opportunity

Past performance is not necessarily a guide to what to expect in future.

Still, at first glance the 22% decline in Associated British Food’s share price over the past five years is hardly reassuring. Yes, the 3.7% dividend yield is attractive – but what is going on with the share price?

ABF is not some hot growth share and possibly never will be. But I think its share price fall means it is now attractively priced.

That is because the price largely reflects what I see as short-term challenges for the company, such as rising ingredient costs, weak markets for some commodities, and uncertainty eating into consumer spending.

But I am a long-term investor and taking the long view, I think the current price neglects the company’s deep strengths.

It is a conservatively run, proven player in a market with resilient demand. Plans to demerge Primark will allow the company to focus on its core food business, where premium brands give it pricing power and deep experience lets it run an effective operation.

I reckon ABF’s performance over time will be solid, but that is not reflected in its current share price.

Should you invest £5,000 in Associated British Foods Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Associated British Foods Plc made the list?

Christopher Ruane does not hold any positions in the companies mentioned.

The post £20,000 in an ISA? Here’s how to use it to try to earn £574 of passive income per month appeared first on The Twelfth Magpie.

This decline is primarily driven by heightened geopolitical instability in the Middle East and concerns over its impact on global energy infrastructure. That means investors are getting extra jittery about the UK economic situation – in particular, sticky inflation and a weaker labour market.

While nobody likes to sell at a loss, holding on to shares that face structural challenges might do more damage in the long run.

So in this tempremental environment, here are two shares I’d consider avoiding for now.

Associated British Foods

Associated British Foods (LSE: ABF) is a well-established supplier of everyday goods, giving it defensive credentials. Prior to Covid, it enjoyed 20 years of unbroken dividend increases, making it attractive to income investors.

But disappointing festive trading in 2025 led to a profit warning, putting the share price under severe pressure.

Recent earnings reports reflect a struggle to maintain volume growth in a cost-cutting environment. So even with a decent dividend history, sustainability is now questionable. Not ideal for for those eyeing long-term dividend returns.

Of course, this means the valuation is weakening as analysts downgrade profit forecasts, which could offer a cheap entry point for value hunters.

The primary risk is its heavy reliance on consumer discretionary spending. With inflation still tightening consumer’s wallets, traditional retail faces a difficult road to recovery.

Endeavour Mining

Mining stocks are often treated as safe havens, but Endeavour Mining (LSE:EDV) tells a different story. Its fortunes (and share price) exploded recently inline with a rallying gold price. So long as gold remains strong, it could keep growing.

But the firm has seen high volatility as geopolitical instability ripples through the commodity markets.

From a financial standpoint, it’s doing well but rising costs are a concern. Subsequently, the market has responded with caution, which naturally has hit the share price.

On top of that, the dividend story has been erratic, largely because management is currently prioritising capital preservation and debt reduction over shareholder payouts.

So now we have a company that relies heavily on operational stability in politically sensitive regions. That’s not exactly a low-risk investment. If gold demand softens, it could all come tumbling down like a house of cards.

What are some better options?

Avoiding these stocks isn’t about panicking, it’s about recognising that the capital might be better deployed elsewhere. Both ABF and Endeavour Mining face specific pressures that could persist for some time, whether weak retail demand or operational hurdles in volatile regions.

Keeping your money tied up in underperforming cyclical assets during a market downturn is a classic investing trap.

Rather than clinging to stocks that are under water, shifting toward more defensive, reliable options might be worthwhile. Consider utility companies like SSE and National Grid, or blue-chip pharmaceutical giants such as AstraZeneca. They look more stable than retail and mining stocks right now.

These firms typically offer more consistent dividend payouts and possess the ‘defensive moats’ necessary to weather economic storms.

By strategically allocating capital into more resilient sectors, you can safeguard a portfolio while waiting for the market outlook to improve.

The post 2 UK shares to consider avoiding as the FTSE 100 extends losses appeared first on The Twelfth Magpie.

Associated British Foods (LSE:ABF) is set to demerge Primark. And I think this is worth a closer look. 

What’s the opportunity?

Is another retailer joining the FTSE 100 really an opportunity? To see why it might be, here’s Luke Bridgeman – a portfolio manager at Hosking Partners – on the Business Breakdowns podcast:

“Because retail is a negative working capital business, these companies don’t require so much outside capital in order to grow and to develop. And that means that as public shareholders, we’re often denied the opportunity to get exposure to them. If you look at the great supermarkets, often they’re family businesses which only come to the stock market once they’ve gone ex-growth and they’re mature, and the equity market is simply an exit for them rather than a source of capital.

“So we keep our eyes open for other growth retailers which we can get hold of. And often they are in a wrapper [in other words, owned by another company] such as3i. Another example would be the pan-European fashion retailer called Primark, which is part of a much larger conglomerate called Associated British Foods. So it’s really exciting having the opportunity to get exposure to such a fast-growing retailer.”

The chance to buy shares in a retail business isn’t particularly unusual. But Primark is different.

Fast fashion

Primark’s biggest opportunity is in the US. That’s often something to view with caution — it can be a tough market.

The business, however, is off to a decent start. It currently has 33 stores, but plans to expand this to at least 60. 

Primark focuses on customer value, which I expect to be popular over the long term. But this only works for operators with low costs.

The main way the company does this is by focusing on its stores. It doesn’t offer home delivery, which reduces returns and logistics costs.

It also manages its SKUs carefully, has stores with functional layouts, and keeps marketing costs down. All of that helps keep prices down. 

Recent weakness

Despite these strengths, Primark’s recent results haven’t been that strong. In the latest update, total sales growth came in at 2%.

Beneath the surface, things look even worse. New stores generated 4% growth, meaning the existing ones went backwards.

ABF attributed this to weak consumer spending and unusual weather. It also highlighted the conflict in Iran.

All of that makes sense. But the time to spin off a business isn’t usually when you’re having to point out the ongoing risks.

To my mind though, that looks like the opportunity. And analysts are forecasting that the company could be worth £10bn.

Buy now or wait?

A £10bn valuation implies a price-to-earnings (P/E) multiple of around 11. That’s roughly in line with other UK retailers.

The thing is, I don’t think Primark is the same as other UK retailers. It looks to me as though it has much better prospects. 

The main detail I’m still waiting for is debt. ABF has around £3bn in net debt, but how much will Primark take?

Once that becomes clear, I’ll looks again. But for now I’ll keep this on the radar as a potential opportunity.

The post How is Primark coming to the FTSE 100 an exciting opportunity for investors? appeared first on The Twelfth Magpie.

Despite the index’s strong performance, though, not all of its 100 constituent members are doing so well.

Here are three blue-chip UK shares I think potentially look cheap from a long-term perspective — and worth considering.

Associated British Foods

For years, Associated British Foods (LSE: ABF) has faced a couple of ongoing challenges.

One is how to convince customers that foodstuffs and ingredients deserve a price premium. Using brands like Twinings can help, but ABF’s portfolio contains unbranded as well as branded products.

A second challenge has been getting investors to value the Primark discount clothing chain attractively. Its loyal customer base and strong brand can sometimes feel overlooked by investors.

Those challenges persist as April ends.

Inflation driven by the Middle Eastern war threaten the food business’s profit margins, though for now the company has said the cost consequences for this year ought to be “manageable“.

This month also saw plans to demerge Primark as a standalone listed company. Over time, that could help unlock value if investors perceive it differently out of the ABF structure. Meanwhile, ABF’s foods business is unexciting but well-run and profitable.

Taken together, the company’s price-to-earnings (P/E) ratio of 14 and 3.6% yield look attractive to me following a 14% share price fall so far this year.

Reckitt Benckiser

A FTSE 100 company that has had an even worse start to 2026 is Vanish-owner Reckitt Benckiser (LSE: RKT).

Its share price has plummeted by a quarter so far this year. The P/E ratio of 10 is even cheaper than ABF. Reckitt’s 4.6% yield is well above the 3.0% average of the FTSE 100 overall.

Reckitt clearly has challenges that have hurt its share price. Take your pick: ongoing legal risks in its infant formula business, ingredient cost inflation, weakening consumer sentiment in key markets, like-for-like sales declines in both North America and Europe in the first quarter – and more.

But I think Reckitt also has the tools to deal with such challenges over time. Its premium brands give it pricing power and it operates in product categories that will endure, like detergents and cleaning agents.

It may take years, but I expect Reckitt will ultimately be worth considerably more than today.

WPP

Still, I could have the balance of risks and potential rewards wrong with Reckitt. Nobody knows the future. An even trickier share in that respect is ad group WPP (LSE: WPP).

The WPP share price has crashed by 21% so far this year. That is on top of a dreadful performance last year, meaning it has more than halved in 12 months.

The clear culprit? AI.

Investors are fretting that AI could eat ad firms’ business.

So far, WPP has not convincingly reassured them. Like-for-like revenue fell 4% year on year in the first quarter.

Still, with its 5.6% dividend yield, deep expertise, superb client roster, and its own plans to use AI to help the business, WPP looks potentially cheap to me, although risky.

I plan to hang onto my shares.

The post 3 FTSE 100 shares I think look undervalued heading into May appeared first on The Twelfth Magpie.

Along with first-half results, the company had this to say: “ABF has announced today that following an in-depth review … the Board of ABF has decided to proceed with a demerger of its retail business (“Primark”) from its food business“.

Following the split, shareholders will own shares of the two separate listed companies. And to me, that has to be a good thing.

Hello ‘new Primark’

Maybe a retail investor likes the look of Primark — which has very much been the jewel in its crown over the longer term. But why would they want to own part of a yeast and bakery ingredients business? Or sugar, or agricultural products? And it works the other way round. ABF’s foods business is quite nicely diversified, but isn’t including cheap undies and shirts going a bit far?

Unfortunately though, the market isn’t responding as enthusiastically as me. As I write, ABF shares are hovering around 4.5% down on the day.

But then, a 17% drop in adjusted operating profit alongside adjusted earnings per share falling 15% can do that. At least the interim dividend is unchanged at 20.7p per share — with a forecast 3.3% yield.

Profit pressure

We shouldn’t be too surprised, not after the company issued a profit warning back in January. And CEO George Weston this time opened with: “We knew the first half of this financial year was going to be challenging and that’s borne out in our financial results.”

Star asset Primark has been struggling under the same pressures as the rest of the retail sector. But Weston added: “Primark continued to make strong progress in re-energising its customer proposition in a difficult clothing market. Our actions in the UK since the autumn drove like-for-like sales growth and market share gains.“

There’s an extra warning on top of the January one however, and I think we all know which part of the world it involves. He added: “We are managing the impacts of the Middle East conflict. Given what we know today, we expect the cost consequences in 2026 to be manageable. However, there is a risk to Primark sales if the conflict persists and consumer spending deteriorates.“

Tricky choice

Those who’ve been keenly watching Associated British Foods now face a decision. Consider buying ABF shares today, and then sell the part we might not want later? Until the demerger, I can easily see more share price weakness, so the price might be right if we take that route. But if we wait until the deed’s done, might that immediately push the individual share prices up?

I’ll wait, and I’ll consider Primark after the split — the CEO did say he expects improvement in the second half. And despite the clear economic danger, I think investors could do well to consider it too. The new food business? I’ve no idea, as I’ve never been interested in it.

The post Time to buy Associated British Foods (ABF) shares after this exciting news? appeared first on The Twelfth Magpie.

Right now, I can see shares in each category for investors to consider. And they’re not always the most obvious names.

Associated British Foods 

The FTSE 100 currently has a dividend yield of 3.3%. And Associated British Foods (LSE:ABF) is exactly in line with this. 

That makes the next question a straightforward one – is this an above-average business? I think it might be.

The company’s main asset is Primark. And while it’s a retailer, it’s important not to underestimate just how valuable it is. Primark recently reported a fall in like-for-like sales across Europe. But that’s not as significant as it might be. 

It certainly highlights a key risk. When consumer spending is weak, lower sales can lead to price cuts that weigh on margins. Unlike the majority of publicly-traded retailers, though, Primark is still expanding rapidly. Especially in the US.

The firm currently has around 38 stores in the US. But there’s talk of this growing to over 100 by 2030, which is a big increase.

While success isn’t guaranteed, the early signs are promising. And there are also expansion plans in other countries. That means Primark’s growth isn’t limited to like-for-like sales. And it’s why I think dividend investors should take a look. 

Grainger

Despite excess inventory in the UK housing market, affordability issues remain. Enter Grainger (LSE:GRI).

Ultimately, housing is a basic need. And if people aren’t in a position to buy – for whatever reason – they have to rent.

The firm owns and leases residential properties. And it has 11,000 properties with 5,000 more in its pipeline for future growth

In terms of the dividend, the situation is a little complicated. Grainger is becoming a real estate investment trust (REIT). That means the dividend will become mandatory. But the firm should benefit from tax exemptions on its rental income.

Analysts think the result will be a yield of around 5.5%. And that might well be attractive in today’s market. 

There’s obviously a shortage of housing in the UK, so demand for Grainger’s properties should stay strong. But there are risks. One of these is regulation. Shifting standards can result in higher costs and while Grainger is well-positioned right now, that could change. 

In terms of dividends, though, this looks like an interesting business in a durable industry. And I think it’s worth a closer look. 

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.

Income investing

There’s more than one way to be a dividend investor. But the best opportunities are often high-quality companies that the market underestimates.

In my view, both Associated British Foods and Grainger meet this description. Neither is a high-octane bushes, but that’s not the point. 

Both combine decent dividends with strong growth prospects. And that’s what I think investors looking for passive income should prioritise.

The post 2 UK dividend stocks to consider buying in April appeared first on The Twelfth Magpie.

Whether they have done so or not, the good news is that although January has marched onwards it is not over yet.

There is still time for someone who wants to start investing this month to do so.

Getting ready to invest this month

The practicalities need not be time-consuming.

If someone wants to start investing, they need a practical way to do so.

Those could include share-dealing accounts, Stocks and Shares ISAs, and trading apps. It is normally possible to set one up quickly.

A new investor also needs to understand some of the key basics about how to invest, such as valuing shares and spreading  a portfolio across different companies.

Is there enough time to do that this week? I think so.

What’s the point of investing?

One mistake I believe some people make when they start investing is not setting a clear objective and planning how they might get there.

It can be easy to see the point of investing as making money. But that is an oversimplification.

There are different ways somebody may make money by owning shares. Price rises are one, but dividends can also help an investor build wealth.

Meanwhile, some things might eat into the money invested rather than help it grow, including share price falls. Small-seeming trading fees and commissions can add up over time too, which is why I mentioned taking time to choose the right platform for buying and owning shares.

So I think it is helpful when someone starts investing for them to be as clear as possible about what their goals are and how they think they need to invest to try and meet them.

Of course, that can change with time and experience. But at least having a clear starting point can help provide a direction of travel.

On the hunt for shares to buy

Another thing to think about, of course, is what shares to focus on.

One share I think investors should consider is Associated British Foods (LSE: ABF).

That may be a somewhat unpopular view right now! After an unexpected profits warning, the share price is already down 11% this month.

But I think a long-term view can be helpful, from the day one starts investing.

Associated British Foods has challenges, not only with demand in its Primark chain of cheap clothes shops, but also in the food business. Revenues in the sugar business have been falling, for example, and I see that as an ongoing challenge for the company.

Still, all is not lost. The company has a diversified range of assets that give it some protection from the economic cycle. It owns a welter of well-known and well-loved brands, from Twinings to Silver Spoon.

I see this as a somewhat dull but solidly run, profitable business that has long-term potential thanks to well-established operations and quality brands.

I do not think the current share price fully reflects that.

The post It’s already the last week of January! Time to start investing? appeared first on The Twelfth Magpie.

The problems stem from a poor Christmas trading period. CEO George Weston initially said: “Primark has had a challenging start to the financial year, with a mixed performance.” And Primark really has been the jewel in the crown for the company for some time.

Like-for-like sales

The latest update confirms just a 1% increase in total sales compared to the same period a year ago. That’s maybe not too bad. But like-for-like sales have been a bit of a worry, falling 2.7% in the period. These figures are in line with the earlier estimates, so there’s no change. But it does eliminate the uncertainty, with the weaker trading at least no worse than feared.

Looking at Associated British Foods’ retail business in general, sales in the period rose 4.2% at actual currency — better than the original 4% estimate. Grocery sales were largely unchanged.

These aspects of the company actually look reasonable to me. I really wasn’t expecting Primark, or retail in general, to have a great holiday season this year. Not with all the turmoil in the economic situation in the UK and globally. So, not brilliant, but no great worry — that’s my take.

Not Primark

When it comes to ABF’s other businesses, I’m less happy. Sugar revenue did worse with a 4.3% fall than the earlier 2% drop estimated. Agriculture down 4.1% and Ingredients dipping 2.9% are largely in line with the initial figures. On a geographic basis, sales in Europe (excluding UK and Ireland) fell 1% in total, but declined 5.7% on a like-for-like basis.

All in all, I see Associated British Foods as a confusing mess for investors thinking of buying. Almost half the company’s sales come from Primark, a trusted brand with a loyal following. It’s the first place I looked when I needed a suit last year — though I found nothing appropriate for my corporeal magnitude and I ended up paying more than I hoped at Marks & Spencer.

Still, socks, underwear, t-shirts… it’s where I go. I like Primark, and I see a positive future for it when inflation gets back to treading a downward path.

Time for change?

One statement in November’s full-year results stood out to me. “Board review of group structure announced, which may lead to a separation of the Primark and Food businesses,” it said.

If that should happen, I’ll definitely consider buying Primark shares. But for now, I’ve no interest in sugar beet or pig food. At least the latest news has put a stop to the month’s ABF share price fall. And I could see a slow recovery coming.

The post What next for the ABF share price after this latest update? appeared first on The Twelfth Magpie.

Complacency creeps in

The pop over the past couple of weeks has come more from positive global risk sentiment. Even though this is good, I think the UK stock market is being carried by this, rather than by strong UK-specific factors. In fact, given the state of the economy, I believe some investors are becoming complacent.

The latest GDP figure for Q3 showed anaemic growth of 0.1%. In more recent data, the unemployment rate has risen to 5.1%, the highest level since 2021. There’s also growing chatter about a rise in struggling firms. This fuels worries about underlying economic weakness that could hit corporate earnings.

Yet for the moment, the stock market is being carried higher. This is fuelled in part by rising valuations for AI and tech companies in the US. If we see a correction in this area, it could pull the FTSE 100 lower. At that point, people might start to behave more as if the UK economy isn’t in the best shape, compounding the problems.

Given that the UK data has been deteriorating in recent months, along with the increase in US tech valuations, I think the odds of a crash have risen.

How to handle it

I don’t want to be seen as someone who’s completely doom and gloom. Despite my view that the odds of a big move lower are increasing, I still don’t believe we’re going to see a sharp fall immediately. However, I think it’s worth considering some defensive stocks at the moment to help protect a diversified portfolio.

For example, Associated British Foods (LSE:ABF) is a food company that owns famous brands, including Kingsmill bread and Ovaltine, as well as operating at the beginning of the supply chain via manufacturing and selling raw ingredients.

Over the past year, the share price is up 5%, with a dividend yield of 2.93%. This doesn’t make it a high-growth stock, but it has several qualities that make it a good defensive idea. For example, it generates revenue from multiple divisions, some of which are entirely unrelated to others. Furthermore, it owns brands that sell everyday groceries and staples. People buy these regardless of the economic cycle.

It’s a global company too. So even if the UK underperforms, it can offset any negative impact here from sales around the world.

And of course, we can’t ignore its Primark unit. It’s one of the biggest names in fast fashion and is continuing to expand in the UK, Europe and US.

As a risk, it’s exposed to commodity prices (such as wheat and sugar), which can be very volatile. This can mean that costs of production could increase without much warning. And Primark, while huge, has been rather sluggish of late. Despite this, I think it’s a good stock to consider if someone is worried about the chance of a crash.

The post The FTSE 100 hits 10k! Here’s why the odds of a stock market crash have risen appeared first on The Twelfth Magpie.

The company has been considering separating out Primark – its largest business. But results had better start improving before it gets around to doing that.

Weak sales

Primark accounts for almost half of the ABF’s total sales. So investors are justifiably interested in how the business is doing and a key measure of this is like-for-like sales growth.

The company is busy opening new stores and this naturally causes revenues to rise. But it can’t do this forever, so it also needs to find ways to increase sales in its existing outlets.

Like-for-like sales growth measures exactly this. During the Christmas period, however, this was negative for the business overall, 2.7% lower than it was the year before.

Management put this down to weak consumer confidence in mainland Europe, where the company struggled most. The 1.7% growth in the UK isn’t exactly spectacular, but neither is it disastrous in a market that’s undeniably challenging across the board.

I think the firm probably has a lot of scope to increase its store count significantly in the US. And this is a very promising market for Primark to expand into further. 

In Europe, however, the problem is one that investors will be very familiar with. Since 2024, like-for-like sales have faltered, stalled, and then gone into decline – and that’s a problem.

Investing in Primark

Primark has a well-earned reputation for being a strong retailer. And its popularity with customers in the US means, as I mentioned, that it might well have some attractive growth prospects there.

That growth potential meant ABF shares got a boost in November when the firm announced that it was thinking of splitting out its Primark division. But the latest results create a problem here.

For that kind of move to work, investors need to be positive about the retailer’s prospects. And like-for-like sales going backwards isn’t likely to generate this feeling.

At the moment, investors can invest in Primark as part of ABF’s broader portfolio of assets. But these are generally less exciting than the value retailer. 

With the stock falling, though, this might not matter. Investors might think the share price is low enough that Primark is worth the entire market value by itself.

Primark’s annual sales are around £10bn and ABF has a market value of £13bn. Given this, I think it might be worth considering as a potentially undervalued opportunity.

A buying opportunity?

Associated British Foods shares look like good value to me. The question, though, is whether they’re the best opportunity available right now. 

That might come down to specific facts about what an investor is looking for. I think the stock might be a nice way to consider adding a value tilt to a growth-focused portfolio. 

This isn’t the situation with my portfolio right now, though, so I’m going to keep this one on the bench. I’ll see how things develop with my other investments and adjust accordingly.

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