If, like me, you have the time and inclination to do due diligence, you likely prefer individual stocks. In addition to the potential for outsized gains, individual stock picking gives me a feeling of control over my own destiny.

With that in mind, here are three leading UK stocks to consider for a retirement-focused ISA.

RELX

RELX is an ideal long-term British retirement holding because it delivers stability through recurring subscription revenues (over 50% of income), high margins, and exceptional free cash flow of ~27% of revenue.

The company has grown net income by 8.59% year-on-year, maintains a 20.5% net profit margin, and has increased dividends for 15 consecutive years. Dividend growth is typically in the high-single-digits and the payout ratio is around 62%.

With £2.59bn in annual free cash flow and £2.61bn operating cash flow, its debt load looks manageable, albeit a bit high.

A more pressing risk is the disruptional threat of generative AI, which could change how professionals access information.

AstraZeneca

AstraZeneca (LSE: AZN) is another standout long-term retirement holding to consider. It offers exceptional stability through a diversified oncology-focused drug portfolio, strong cash flow generation, and a disciplined balance sheet.

The company reported FY 2025 revenue of £46.3bn (up 8%), with Q4 2025 revenue rising 4% to £12.2bn. Looking ahead to FY 2026, the pharma giant anticipates mid-to-high single-digit total revenue growth and low double-digit core EPS growth.

The dividend yield isn’t much at just 1.73%, but the payout ratio of only 46% allows room for growth. Its balance sheet shows total assets of £82.3bn against liabilities of £50.5bn, demonstrating financial resilience.

A key risk is patent expirations, including Farxiga (£6bn annual sales) losing exclusivity, which could pressure revenue if pipeline launches don’t offset the decline.

Diploma

Diploma (LSE: DPLM) offers exceptional stability through diversified exposure to three essential industries: life sciences, industrial controls, and safety. It enjoys strong cash generation and enacts disciplined capital allocation.

The company reported strong FY25 numbers: an 11% rise in revenue to £1,524.5m and adjusted operating profit up 20% to £342.7m. It also has excellent operating margins at around 22.5%. Free cash flow was £247.2m with 105% conversion, while leverage is conservative at 0.8 times net debt/EBITDA.

Like AstraZeneca, it’s a growth-focused stock with a low 1.1% dividend yield. But with just a 43.85% payout ratio and 10.78% average dividend growth over three years, it shows promise.

A key risk is acquisition integration and execution, as Diploma’s growth strategy relies on both organic growth and selective acquisitions in competitive markets.

Final thoughts

When looking for stocks to hold for a decade or longer, it’s important to look beyond the headline growth and income figures. A company that’s up 100% in a year is unlikely to maintain that momentum indefinitely. A stock with a 9% yield probably lacks sufficient coverage and will need to reduce payments soon.

Instead, focus on things like diverse income streams, earnings visibility, and recurring revenues. The three mentioned here fit those criteria, but they aren’t alone — there are many other equally compelling options to consider on the UK market.

Should you invest £5,000 in AstraZeneca 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 AstraZeneca Plc made the list?

Mark Hartley owns shares in AstraZeneca, RELX, and Diploma.

The post 3 UK shares to consider holding in a Stocks and Shares ISA for a decade appeared first on The Twelfth Magpie.

That’s enough to turn a £1,000 investment into £23,959 and the latest update shows a business going from strength to strength. So, should investors think about buying?

Growth

Diploma reported 17% revenue growth in the six months leading up to the end of March. And wider margins meant earnings per share climbed 36%.

Beneath the surface, it’s clear where the growth is coming from. Here’s a breakdown of how much Diploma’s individual units grew by:

The Controls division distributes things like cables and fasteners. Those businesses are benefitting from some strong demand right now.

Increased defence spending has been driving demand for aerospace components. And data centre building has resulted in strong cable sales.

As a result, Diploma increased its forecast for the year and the stock went up. But is it the time to be greedy when others are fearful?

Risks and rewards

The risk with Diploma is obvious. It sells into cyclical end markets and if demand falters in either aerospace or data centres, growth could slow dramatically.

At a price-to-earnings (P/E) ratio of around 31, the stock could fall sharply if this happens. And it’s not as though this hasn’t happened before.

At the start of 2025, Diploma’s revenue growth slowed and the share price fell 20% in two months. That’s the risk of high multiples and cyclical industries.

Investors, however, might note that the stock is still up 47% from its previous highs. So, even buying at the wrong time has turned out well.

Does this give long-term investors a license to consider buying? I’m not so sure. 

When to buy?

Diploma’s recent results are terrific, but I’m a little hesitant. I’m trying to work out how much of that is due to temporary factors.

The firm’s stated ambition doesn’t fill me with confidence. It’s aiming for 5% annual organic revenue growth. To my mind, that doesn’t justify the current P/E ratio. And aside from the Controls division, results were short of even that.

When the stock crashed last year, it was picked up by aerospace and data centre demand. But I don’t think that will last forever.

I’ve seen what happens when cyclical industries lose momentum. And that makes me wary of jumping in at today’s prices.

I could be wrong, but…

I used to own Diploma shares, but I sold them in 2023. The reason was simple – I was concerned about a high valuation and a possible downturn.

By the time the stock crashed, it was already up 75% from the price I sold it at. So it never fell back to that level. 

What that means is that I don’t have perfect foresight as to when a downturn might come. But I’m not convinced anyone does. 

Given that investors can’t know everything, the thing to do is to focus on what they can know. And I think that points in one direction.

Diploma is definitely a stock to keep an eye on. But my view is that there are more compelling stocks to consider buying right now.

Stephen Wright has no position in any of the companies mentioned.

The post £10,000 invested in this FTSE 100 stock 5 years ago is now worth £23,959 appeared first on The Twelfth Magpie.

Some contribute steadily through market cycles. Others pause, delay, or invest more heavily later in life. Those differences can have a surprisingly large impact on how quickly an income target is reached.

Consistency matters

The challenge with long-term ISA planning is that life rarely follows the spreadsheet. Contributions tend to rise, pause, or fluctuate as circumstances change.

Income, career progression, and market volatility all influence how people invest in practice. Some steadily increase contributions as earnings grow, while others move in and out of the market depending on confidence or financial pressures.

The chart below shows how those different behaviours can lead to very different outcomes over a 25-year period. While all three hypothetical investors ultimately build sizeable portfolios, the speed at which they reach a meaningful financial milestone varies significantly.

That difference matters. Long-term results are shaped not just by assumed returns (here modelled at 6%), but by how continuously capital is put to work and allowed to compound.

Chart generated by author

Quality compounder

A chart can illustrate how investor behaviour shapes long-term outcomes. But stock selection matters too. Companies capable of steadily growing earnings and reinvesting capital effectively can reduce the pressure on future contributions and help smooth the journey towards a second income.

One business I think deserves consideration is Diploma (LSE: DPLM). The FTSE 100 distributor has built a long track record of what management calls “sustainable quality compounding”, combining organic growth with disciplined acquisitions.

Its largest division, Controls, has enjoyed a strong start to 2026, delivering organic growth of 26%. End markets such as aerospace, defence, data centres, and energy continue to provide strong momentum.

Acquisitions remain central to the investment case, but what matters is not simply the number of deals completed — it’s where capital is being deployed.

Over the last 12 months, the group completed 15 acquisitions worth roughly £310m. Rather than pursuing large mergers, the company targets smaller specialist businesses operating in technical niche markets.

The proposed acquisition of CDM illustrates this strategy clearly. The US interconnect business supplies custom cable and connector solutions to defence and industrial applications. This expands exposure to markets where technical expertise and customer relationships create barriers to entry.

Importantly, this expansion has not stretched the balance sheet. Leverage remains modest at just 0.8 times EBITDA (earnings before interest, tax, depreciation, and amortisation).

What could go wrong?

No acquisition-led growth strategy is risk free.

Controls has benefited from exceptionally favourable conditions and that pace may not continue indefinitely. Defence, energy, and data centre spending can fluctuate, while weaker industrial demand could weigh on parts of the portfolio.

There is also execution risk. Its valuation increasingly assumes management can continue integrating acquisitions successfully while maintaining disciplined pricing. If deal quality deteriorates or growth slows materially, the premium rating may come under pressure.

That said, for investors building long-term wealth inside an ISA, Diploma still looks like the type of business worth close attention. Its two-decade record of disciplined growth, strong returns, and exposure to structural growth markets helps explain why the shares command a premium valuation — and why the long-term compounding story may not be over yet.

Should you invest £5,000 in Diploma 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 Diploma Plc made the list?

Andrew Mackie owns shares in Diploma.

The post How long does it take to build a £1,000-a-month ISA passive income? appeared first on The Twelfth Magpie.

Sustainable quality compounding

The standout feature from Diploma’s first-half results was the strength of underlying growth.

Organic revenue increased 15%, comfortably ahead of the group’s five-year average of 10% and well above the level typically expected from industrial distributors. Importantly, this was not driven by a single business alone. While Controls delivered exceptional performance, management highlighted broad-based momentum across the wider portfolio.

Equally encouraging was profitability. Operating margin expanded by 300 basis points to 24.5%, suggesting growth is not coming at the expense of efficiency or pricing discipline. Many companies can grow quickly or protect margins. Delivering both simultaneously is far harder.

This matters because it reinforces the quality of Diploma’s business model. The company operates in specialist markets where technical expertise, customer relationships and value-added services can support stronger pricing power than more traditional distributors.

Management’s upgraded full-year guidance adds further weight to that argument. Organic growth expectations have increased from 9% to 12%, while operating margin guidance remains around 25%.

Taken together, these results suggest a company benefiting from more than favourable market conditions alone. Instead, they point towards a business continuing to strengthen its long-term growth profile while maintaining operational discipline.

The engine of future growth

Acquisitions remain a central part of the Diploma investment story — and activity is accelerating.

The group completed 15 deals over the last 12 months, investing around £310m at an average acquisition multiple of roughly 8x earnings. Seven of those transactions have taken place since the company’s Q1 update alone, representing around £180m of additional investment.

This matters because its model is not built around large, transformational mergers. Instead, management targets smaller specialist businesses operating in attractive niche markets where technical expertise and customer relationships create defensible positions.

Recent deals also show where management sees future opportunity. The proposed acquisition of CDM, a US interconnect business supplying defence and industrial markets, increases exposure to areas already benefiting from structural demand tailwinds.

Importantly, this expansion has not materially stretched the balance sheet. Despite the increased deal activity, leverage remains modest at just 0.8x EBITDA, leaving significant financial flexibility for further expansion.

What could go wrong?

No acquisition strategy works flawlessly forever.

Controls delivered exceptional growth this half, supported by favourable conditions across defence, datacentres and energy. That pace may prove difficult to sustain indefinitely.

At the same time, Diploma’s long-term record increasingly depends on integrating acquisitions successfully and maintaining disciplined deal pricing. If growth in key divisions slows or acquisitions fail to deliver expected returns, investor expectations could become harder to satisfy.

What’s the verdict?

With a trailing price-to-earnings multiple of nearly 50, Diploma is not a stock many investors would describe as cheap. But premium businesses rarely are.

For me, these results suggest the group continues to justify that rating through strong organic growth, expanding margins and disciplined acquisitions. After such a long run, some investors may feel they have missed the opportunity. I’m not convinced that is necessarily true if the compounding story remains intact.

Andrew Mackie owns shares of Diploma.

The post Diploma shares jump 6%: is it too late to buy this FTSE 100 compounder? appeared first on The Twelfth Magpie.

Rather than focusing on a single lump sum, a more useful way to think about closing the gap to the State Pension is to consider how consistent monthly investing could build a second income over time.

So how much could regular ISA investing actually grow into?

Assuming a 20-year investment horizon and an average annual return of 6%, the long-term outcomes begin to look more tangible:

• £300 per month could grow to around £132,428
• £500 per month could grow to around £220,714
• £750 per month could grow to around £331,070

Using the widely followed 4% withdrawal rule, the largest of these portfolios could potentially generate income broadly comparable to the current State Pension. The smaller portfolios may fall short of fully replacing it, but they could still provide a meaningful supplementary income stream in retirement.

And that highlights an important point. Building long-term passive income is rarely about hitting one perfect number overnight. More often, it comes down to starting early, investing consistently, and allowing compounding to do the heavy lifting over time.

Why dividend growth matters too

Of course, building a meaningful second income is not simply about chasing the highest yields available today. In my experience, consistently growing dividends can be even more powerful over the long term.

One company I think demonstrates this well is Diploma (LSE: DPLM). The FTSE 100 specialist distributor currently offers only a modest yield compared to traditional income shares. However, its long-term dividend growth record is exceptional.

According to AJ Bell data, the dividend grew at a compound annual growth rate of 13.1% between 2016 and 2025. Analysts expect payouts to continue rising in both 2026 and 2027.

What particularly stands out to me is the quality of the underlying growth strategy. Management continues expanding into structurally attractive markets such as aerospace, data centres, diagnostics, automation, infrastructure, and clean energy. These are long-term themes rather than short-term cyclical trends.

At the same time, acquisitions remain a major growth driver. Since 2019, the company has acquired 48 businesses, investing £1.4bn to expand organically into fragmented markets where it sees long-term opportunity. Importantly, management appears highly disciplined on returns rather than simply pursuing scale for the sake of it.

What could go wrong

There are risks. The shares trade on a premium valuation, meaning any slowdown in earnings growth could hit sentiment hard. Industrial businesses are also not immune to broader economic weakness.

Another point worth watching is acquisition integration. The group has completed a large number of deals in recent years and maintaining its strong company culture while continuing to scale will be critical. If management misjudges acquisitions or overpays for growth, returns could eventually begin to weaken.

Even so, I think the company highlights an important lesson for long-term ISA investors. A lower starting yield combined with strong dividend growth and capital appreciation can often build far greater wealth over time than simply chasing the highest income today.

The post How big would an ISA need to be to generate an extra £12,547 a year in passive income? appeared first on The Twelfth Magpie.

And if you hold those shares in a Stocks and Shares ISA, all that income and any capital gains are shielded from UK tax, so every pound of growth works only for you.

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.

But which two UK shares might give you the best chance of achieving that?

Yield isn’t everything

The yield represents how much is paid out per share, but it shouldn’t be the core focus for income investors. Rather, focus on how reliable and sustainable the dividend growth is – this is the cornerstone of any serious income plan. 

Based on long, double‑digit dividend growth records, strong reinvestment economics and current expectations, two standout candidates are Diploma (LSE: DPLM) and Spirax Group (LSE: SPX).

Both have long histories of growing their payouts and operate in specialist areas where they can keep reinvesting at attractive returns.

Diploma

Diploma’s a specialist distributor supplying mission‑critical components and services into areas like industrial controls, seals and life sciences.

These are not glamorous markets, but they tend to be sticky. Once a customer relies on you to keep their factories or labs running, they are slow to switch.

Some key numbers investors might like are:

• Shares up 820% in 10 years.
• Forty-one‑year unbroken dividend track record.
• Cash flow covers dividends by 3.37 times.
• Earnings growth of 43% year‑on‑year.

Put simply, profits are growing fast, and the dividend is well covered by cash. That gives the board room to keep increasing the payout while still funding acquisitions and organic growth. 

The risk though, is that the market may have priced in future growth. After such a strong recent rally, the valuation is asking a lot. Any unexpected earnings decline (or a bad acquisition) could hurt the share price — even if the long‑term appeal remains.

Spirax

Spirax Group lives in a different but equally specialist world. It provides steam and thermal energy solutions and related technologies to factories across the globe.

Think of it as helping industry move heat around more efficiently and reliably, which is a big deal as companies try to cut emissions and energy waste.

Here are some headline figures:

• Forty-six‑year unbroken dividend track record.
• Cash flow covers dividends by 2.3 times.
• Strong balance sheet: only £1bn in debt vs £2.66bn in assets.

Like Diploma, it also faces valuation risk. Trading on a price‑to‑earnings (P/E) ratio of 32.6, it’s high for an industrial business — even a good one. If earnings disappoint, or growth slows for a couple of years, the share price could fall sharply as investors look for alternative options.

A focused ISA strategy

A Stocks and Shares ISA lets you collect every penny of returns from your investments, with no worry about capital gains tax along the way. For long‑term investors, that tax shelter can make a huge difference, especially when you reinvest the dividends so the pot compounds exponentially.

So instead of chasing whatever hot stock offers a high yield today, I prefer to focus on steady, consistent dividend growth.

Diploma and Spirax both have long records of growing their payouts and they operate in niches with room to keep doing so. That’s why I think they’re well worth considering for a long‑term ISA income strategy.

The post How these 2 shares in a Stocks and Shares ISA could deliver life-changing passive income appeared first on The Twelfth Magpie.

So let’s say an investor has £9,000 sat on the sidelines. How much could dividends generate today? And how much could this be worth in the future?

What’s the income potential?

Here in the UK, the FTSE 100 is by far the most popular destination for capital. And right now, it offers an overall dividend yield of 2.93%. That means if I were to invest £9,000 today in a low-cost index tracker, my portfolio would now generate a £263.70 passive income overnight.

On the surface, that’s not much different to a much-lower-risk savings account. But the key advantage of the stock market is that, unlike a savings account, the yield gradually increases in line with company earnings.

Looking again at the FTSE 100, over the last decade, dividends have increased by an average of 3.3% on an annualised basis. And assuming this trend continues over the next 10 years, the £263.70 dividend income today could grow to £364.85.

Yet, could stock pickers potentially earn even more?

A bigger income opportunity?

Instead of relying on index funds, investors can craft a custom portfolio. This requires a lot more effort and discipline. But it also opens the door to potentially life-changing returns as long-term investors in Diploma (LSE:DPLM) have learned first-hand.

Ten years ago, the value-add distributor of industrial products and services only offered a modest payout of 2.73%. But with the business proving to be a free cash flow generating machine, Diploma’s grown its dividends each year by an average of 13.1% — almost four times what FTSE 100 index investors have enjoyed.

In terms of money, that means anyone who invested £9,000 in April 2016 has gone from earning a £245.70 passive income to £764.42 today. And if all this money had been automatically reinvested, the initial £9,000 would now be worth £95,721.30!

Clearly, Diploma has been a fantastic investment. But is it still worth buying today?

Does Diploma hold up in 2026?

While selling specialised wiring, fasteners, and seals, among other industrial products, is hardly an exciting business model, it’s nonetheless a critical one. And it’s why just last month, the company announced a significant upgrade in its 2026 full-year guidance, raising organic growth and profit margin expectations.

Its strategy of continuously executing bolt-on acquisitions and then improving its acquired businesses has proven to be a winning formula. But sadly, that doesn’t make it a guaranteed winner in the future.

Acquisitions, even smaller digestible ones, still come with significant execution and integration risk. And unexpected delays are a notorious source of value destruction and cost overruns in this type of dealmaking, especially in more complex sectors like aerospace and life sciences.

Nevertheless, in my opinion, Diploma’s quality and track record make this a risk worth considering, especially given its increased dividends for 20 years in a row. And while new investors today may only enjoy a 0.89% yield on day one, left to run, this could become far more substantial further down the line.

The post How to turn £9,000 of savings into a £263.70 passive income overnight appeared first on The Twelfth Magpie.

Unfortunately, I’ve missed out on this huge gain. But it’s never too late to repent. Let’s take a closer look at the little-known FTSE 100 distribution company.

Who?

Diploma provides critical products to industrial and commercial customers across a wide range of markets. The group’s divided into three divisions – Controls, Seals, and Life Sciences – contributing 55%, 29%, and 16% respectively to the £1.52bn of revenue reported for the year ended 30 September 2025 (FY25).

Among other things, the group says: “We provide the bolts that hold planes and race cars together, design the seals that make wind turbines work, and help surgeons find the best solutions to save lives”.

An impressive track record

And because it’s good at what it does, from FY19-FY25, it achieved an average annual increase of 18% in both revenue and earnings per share (EPS).

Over the past five years, it’s increased turnover by 94%, more than doubled its adjusted EPS, and improved its operating margin by 3.6 percentage points. It also has an impressive track record of raising its dividend. In fact, the group’s increased its payout by an average of 13.1% a year over the past 10 years.

However, despite this, its remarkable share price performance has pushed its yield lower. Its dividend is now 242% higher than it was and the end of FY15. But the stock’s yield has fallen from 2.7% to 1%.

Potential challenges

Given such a strong financial performance, the stock now trades at 38 times its historic (2025) earnings. Normally, this would make me wary. On the face of it, the group’s shares are expensive.

However, if it were to continue growing its EPS at 18% annually, its price-to-earnings ratio would drop to around 23 within three years, assuming its share price remained unchanged. After five, it would be less than 17.

Looking at it this way, Diploma’s stock appears much more attractive to me.

But the group’s earnings could come under pressure if the global economy suffers a post-Iran slowdown, which looks increasingly likely. In particular, the aerospace sector could take a big knock if fuel costs remain high.

In 2025, 37% of its revenue came from the UK and Europe. Before the current trouble in the Middle East started, economies on the continent were hardly going gangbusters.

Also, some of the group’s anticipated growth is expected to come from acquisitions. Since 2019, it’s spent £1.4bn buying 48 businesses. There’s a chance that the pipeline of opportunities will dry up.

Final thoughts

Despite this, the group upgraded its full-year guidance in March. Previously, it said it was expecting year-on-year revenue growth of 6% and a 22.5% operating margin. Now, it’s predicting 9% and 25% respectively. The aerospace sector and North America’s nuclear power industry were singled out as being the biggest contributors to growth.

For now at least, I believe this positivity continues to justify the group’s valuation.

In my opinion, Diploma’s one of a number of FTSE 100 unsung heroes I’m considering that I think investors could also think about for their Stocks and Shares ISAs.

The post With a 10-year return of over 750%, should I add this runaway success to my Stocks and Shares ISA? appeared first on The Twelfth Magpie.

That is a significant advantage, especially over 20-30 years.

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.

So why doesn’t everyone have one?

A big reason is that people don’t really know where to start. They hear about stock markets, crashes, crypto, and ‘once‑in‑a‑lifetime’ opportunities, and they freeze.

But there is no real downside to using an ISA to invest, beyond the usual risk that markets can fall. The main barrier is not the product — it’s the fear of things you don’t fully understand.

To make it easier, here are three useful things to do before you open your first ISA.

1. Write down realistic goals

Retiring in 10 years is a nice idea, but it only works if you know how to get there. How much can you put in each month? What would you have to cut back on to make it happen?

Start with something you can actually stick to, not a fantasy savings plan that leaves you broke by the end of the month.

2. Research realistic returns

Never assume a fixed return. Markets are unpredictable, and nothing is guaranteed. That said, history can help you set expectations. The FTSE 100 has delivered an annualised total return of nearly 8% since it started in 1984.

That does not mean it will return 8% every year; it could be 30% one year and a 10% loss the next. But over several decades, it tends to average out closer to that 8% figure.

3. Identify stocks with long‑term potential

Stock‑picking is hard, and news headlines often make every tech startup sound like the next Apple. In reality, the most reliable long‑term compounders are often pretty boring.

Think National Grid, Tesco or BT Group — household names that keep the country running. Alongside those, there are lesser-known businesses like Diploma (LSE: DPLM), which is one of my favourites.

A critical undercover company

Diploma makes controls, seals and diagnostics components for defence, agriculture, healthcare and industrial technology around the world. 

Hundreds of thousands of people across the UK, Europe and North America use equipment fitted with Diploma parts every day, without ever knowing the company’s name. They do so through infrastructure such as power grids, water systems, hospitals and logistics networks.

With a market-cap of £8.72bn, it has, over the past 10 years, risen around 770% — the third‑highest return in the FTSE 100. That equates to an annualised gain of roughly 24.15% a year — far above the average for UK stocks.

The bottom line

Diploma is a strong option worth weighing up for a long-term ISA portfolio. It sits in those essential, often overlooked industries that quietly keep the world moving.

There is some risk from cyclicality in industrial demand, and there’s a chance it struggles to maintain such a high‑growth track record. But with earnings growth of about 43% year on year and a 19.7% return on equity (ROE), it looks good right now. And the price-to-earnings growth (PEG) ratio of 1.04 suggests it is fairly priced based on performance.

Still, diversifying investments across several sectors and regions helps offset volatility, so no single shock can wreck your plan.

The post Considering an ISA in 2026? Before diving in, do these 3 things first appeared first on The Twelfth Magpie.

One thing they all have in common is that, at some point, they had an empty ISA, before putting some money in and investing.

Perhaps they did not purposely aim for a million – but they got there anyway!

With the annual ISA contribution deadline falling this weekend, now seems like the ideal moment to reflect on how someone who currently has an empty ISA could aim for a million.

More than one approach

Putting in £20k now before the deadline and then doing the same every tax year, compounding at 5% annually, the ISA would be worth £1m after 26 years.

A much stronger compound annual growth rate of 15% would shave a decade off that timeline, making it 16 years.

Meanwhile, what about someone who does not have £20k a year to invest?

The same approach could still work, but depending on the amount of money put into the ISA it would take correspondingly more time.

Is that worth doing?

With a long enough timeframe, even fairly modest amounts of money invested in the right way can potentially do very well.

Setting realistic goals

You might be reading that and thinking, “right, well obviously it makes sense to aim for a 15% compound annual gain not a 5% one then”.

But that is like deciding to run your first marathon and deciding that doing it in three hours would be better than doing it in five hours.

The reality is that high performance can be very difficult to achieve. Having unrealistic goals can lead an investor to destroy not build wealth by taking badly judged risks.

I think both 5% and 15% compound annual gains are achievable though, at least for some investors.

Going for 5%

Take the 5% example.

At the moment, the FTSE 100 yields 3.1%. That alone could deliver over three fifths of the target.

With some share price growth overall (though most ISAs contain losers, not only winners), I see a 5% target as feasible when sticking to a fairly broad selection of proven blue-chip businesses.

What about 15%?

To hit a 15% compound annual gain over a 16-year period, an investor would need to make some exceptionally good choices about what shares to buy and hold.

An illustration is Diploma (LSE: DPLM). Its share price is up 136% in five years. The past 16 years have seen the share price achieve a compound annual growth rate of 25%.

That is before considering the dividend. Though only 1% today, someone that bought at the far lower price 16 years ago would now be yielding around 34%.

Why has Diploma done so well over the long term?

It has a clear, proven strategy and business model. It focuses on areas where it can add value for clients.

Many of the products it distributes are critical for customers, giving it pricing power and helping it ride the economic cycle.

At its current price-to-earnings ratio of 45, the company is too expensive for my taste. Risks include a slowdown in demand for aviation-related products hurting revenue, as airlines need to trim budgets as jet fuel prices surge.

Other companies that look cheaper to me now also have those characteristics…

The post With an empty ISA today, how long would it take to aim for a million? appeared first on The Twelfth Magpie.