With the market having a bit of a meltdown in recent weeks, plenty of UK shares have taken a tumble. Yet many of the underlying businesses are actually performing admirably. So, is this a buying opportunity for my portfolio? Let’s explore two dividend stocks that I’m tempted to buy today and hold in my portfolio for the next decade.

Surging profits, dwindling share price

I’ve explored Anglo Pacific Group (LSE:APF) before. But as a reminder, this is a royalties mining business. It provides the upfront funds for mining companies like Rio Tinto to develop a mining site in exchange for a percentage of the materials dug up from the ground.

In recent years, management has been expanding its portfolio of sites to focus on renewable and battery metals. In early 2021, the group completed its largest acquisition to date, adding a sizeable cobalt stream to its royalties. And with demand for the metal surging, courtesy of the electric vehicle space, the company is already reaping the rewards.

Its cobalt mine alone contributed a total of $16.5m (£12.2m) last year. And with supply chain disruptions pushing up material prices, the group’s total revenue surged by 95% to a new all-time high! Yet despite this impressive growth, shares of this UK business are actually flat over the last 12 months and still trade below pre-pandemic levels.

The rising materials prices obviously haven’t gone unnoticed by the competition. And with many looking to capitalise on the situation, the supply will eventually meet the demand. This would undoubtedly send metal prices back down and disrupt Anglo Pacific’s impressive underlying growth.

But over the long term, demand for raw materials isn’t likely to disappear. And at today’s price combined with a 6.3% dividend yield, this could be one of the best UK shares to buy today for my portfolio. At least, that’s what I think.

Digging for profits with UK shares

Continuing the theme of mining companies, Glencore (LSE:GLEN) is another that has caught my attention this week. Just like Anglo Pacific, the group has a diversified metals portfolio geared towards renewable energy metals like copper, cobalt, and nickel.

The group has also profited from rising materials prices. So, it’s hardly surprising to see the revenue stream expand by 43%, hitting $203.8bn (£150.1bn) in 2021. Meanwhile, profits returned to their highest point since 2018. What’s more, with inflation pushing up metal prices even higher, it’s possible that the financial performance of 2022 could be even more groundbreaking. That’s why I think this could be one of the best shares to buy and hold today.

Of course, there are some risks to consider. On top of the exposure to fluctuating commodity prices, Glencore’s cobalt production comes mainly as a by-product of its copper mining activities in the Democratic Republic of Congo. This region is not exactly known for political stability, and should a shake-up in government occur, Glencore’s mining activities could become compromised.

However, with additional cobalt streams pouring in from Australia and Canada, along with the rest of its metals portfolio, I feel buying and holding shares in this UK mining group is a risk worth taking.

Zaven Boyrazian owns Anglo Pacific. The Motley Fool UK has recommended Anglo Pacific. 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 Alternative Investment Market (AIM) can be a great place to find growing companies. I’ve been screening the market and think these two AIM shares are buys for my portfolio today. Let’s take a closer look.

An AIM share for digital identity

The first company is GB Group (LSE: GBG), a software provider for digital identity solutions. It operates through three divisions: Identity, Location, and Fraud.

There are a lot of reasons I like the stock. Firstly, it’s able to generate excellent quality metrics, such as consistently high (and increasing) operating margins. This shows me that the company is becoming more profitable over time, which gives scope for things like share buybacks and dividends.

I also see a structural tailwind for the company in the months and years ahead. Customer activity is moving online more nowadays, so GB Group’s identity software solutions will be in increasing demand, in my view. Looking ahead into next fiscal year (the 12 months to 31 March 2023), and growth seems to be improving. Revenue and net profit are expected to grow by 26% and 24%, respectively. This means the shares trade on a price-to-earnings multiple of 27, which is reasonable for a technology company growing by double-digits to my mind.

There are still risks to consider, of course. For one, GB Group disposed of two businesses recently – Marketing Services and Employ & Comply – which could have disrupted the overall Group performance. GB Group is also acquisitive, so this brings execution risk.

But on balance, I think this is a top technology company on AIM. So I’d buy the shares today.

A real estate investment trust

The next AIM share is Warehouse REIT (LSE: WHR), which is a real estate investment trust (REIT) specialising in managing a portfolio of warehouse properties.

A main reason I’m bullish about Warehouse REIT is the growth in e-commerce. This was given a huge boost during the pandemic. Indeed, online retail sales in the UK reached just under £100bn in 2020, and up from £76bn in 2019. A crucial part of e-commerce is the logistics infrastructure behind the scenes. Warehouse REIT operates a portfolio of urban warehouses across the UK as part of this infrastructure. Its tenants include big names such as Amazon, DHL, and Asda.

Profit growth has been excellent recently. For the 12 months to 31 March 2022 (FY22), earnings per share (EPS) is expected to increase by 18%. In the following FY22, EPS is forecast to grow again at a still reasonable 12%. Based on a forward price-to-earnings ratio, the shares are valued on multiple of 23. I consider this fair for the earnings growth. Not only this, but the price-to-net-asset-value is only 0.9, which I view as cheap relative to Warehouse REIT’s high-quality property portfolio.

One thing to bare in mind about REITs is the occupancy rate. Currently, Warehouse REIT’s occupancy rate is high at 94.6%. But it still means over 5% of the property portfolio is untenanted. If this occupancy rate declines, then the profits will certainly fall.  

Overall, though, I think this is a quality AIM share to add to my portfolio today.

Dan Appleby has no position in any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon and Warehouse REIT. 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.

Some of the simplest passive income ideas can turn out to be highly rewarding ones. Take investing in dividend shares as an idea. I like this because it really is passive: I just need to buy the shares and wait, hoping for the income to start adding up.

If I had £1,500 today and wanted to start generating passive income, here is how I would do it.

Getting ready to invest

At a practical level, before I can buy any shares I will need some way to purchase them. That could be a share-dealing account or Stocks and Shares ISA, for example. I would take some time to figure out what best suits my needs. For example, as my objective here is passive income, will I be able to withdraw such income regularly or would that incur additional fees?

I would set the account up immediately. That way, when I identified some dividend shares I wanted to buy, I would be ready to act at once.

Spreading the money

I would plan to spread the money evenly, putting £500 into each of three companies. I would also make sure they operated in different business areas.

The reason for this is what is known as diversification. In layman’s terms, it is the principle of not putting all of my eggs in one basket. No matter how attractive a company may seem today, a business can run into unexpected problems that stop it paying a dividend. If I diversify across three companies, the impact on my passive income streams of one company running into difficulties will be reduced.

Starting to choose the shares

One common field for passive income investors is tobacco. Companies here tend to generate high free cash flows, which can fund beefy dividends. British American Tobacco yields 6.4%. That means that if I spend £100 on its shares today, I would hopefully earn £6.40 in dividends in a year. So a £500 investment could earn me £32 in a year.

Like any dividend, though, British American’s is not guaranteed. A decline in cigarette usage in many countries could hurt revenues and profits. The company is addressing this risk, though. Last year, cigarette revenue actually increased, partly due to price rises. The company is also spending heavily on new tobacco alternative products like the ‘modern oral’ category.

More passive income ideas

I would also invest in asset manager M&G. It has a well-recognised brand that can help it attract and retain clients. Having said that, it could still face difficulties retaining clients if its investment managers do not perform well.

Yet with the large amounts of client money at stake, even a small commission can be lucrative for a firm like M&G. It currently yields 8.6%, so my £500 would hopefully earn me £43 of passive income in a year.

My third choice would be National Grid. Power generation can seem like a boring and slow-moving business, but from a passive income perspective that makes it attractive to me. Shifting patterns of energy consumption could require more capital expenditure, which might eat into profits. But National Grid has a proven business model and its existing infrastructure is a strong competitive advantage. It yields 4.6% so a £500 investment would hopefully earn me £23 in a year.

With my £1,500 invested like that, I would be hoping for annual passive income of £98 – for no work!

Christopher Ruane owns shares in British American Tobacco. The Motley Fool UK has recommended British American Tobacco. 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 Stocks and Shares ISA deadline is fast approaching on 5 April. Today, I want to look at two FTSE 100 stocks I’d buy ahead of the deadline for a starter share portfolio.

My analysis suggests both of these shares have the potential to deliver an attractive mix of income and growth over the coming years.

A 7% dividend yield I’d trust

My first pick is FTSE 100 insurance and retirement group Legal & General (LSE: LGEN). This £16bn company is familiar to most of us through products such as pensions or life insurance. But I think the real story is a bit more interesting than that.

Over the last decade or so, Legal & General boss Nigel Wilson has invested heavily in real assets such as renewable energy, commercial property, and data centres. The group is also investing in residential property.

On the whole, I think these assets have provided much stronger returns than more traditional financial investments, such as government bonds.

The only real risk I can see is that, for me as an outside investor, Legal & General is pretty much a black box. There’s no way I can understand the detail of its finances. I don’t know what impact falling property prices might have, for example. And I don’t know if the company’s assumptions about future income are reasonable.

What I do know is that results so far seem to support Wilson’s strategy. Legal & General’s profits have risen consistently in recent years. Unlike many rivals, it didn’t cut its dividend in 2020. Indeed, the company’s payout has risen by 33% to 17.8p per share since 2015, giving this FTSE 100 stock a 6.8% dividend yield.

My sums suggest Legal & General’s dividend looks pretty safe. I added the shares to my top-rated stocks and shares ISA account last year.

A 2-for-1 deal for a Stocks and Shares ISA

The other company I’d consider buying for a starter portfolio today is pharmaceutical group GlaxoSmithKline (LSE: GSK). Although the shares have traded sideways since 2013, things are about to change.

Later this year, this £80bn business will split itself in two. So-called New GSK will be a pure pharmaceutical business that’s focused on developing important new medicines.

Meanwhile, GlaxoSmithKline’s existing consumer healthcare division will be separated into a new company. This business owns brands such as Sensodyne, Panadol and Nicorette. In my view, it’s more of a consumer business like Unilever or Reckitt than a pharmaceutical operation.

I’m interested in owning shares in the consumer business. I’ve become even more bullish since GSK announced that former Tesco CEO ‘Drastic’ Dave Lewis will chair the new company. I think Lewis achieved excellent results at Tesco. I don’t think he’d take this role if he wasn’t confident he could do well again.

Of course, Glaxo’s future success isn’t guaranteed. Developing new medicines is a slow and expensive process that doesn’t always go to plan. The consumer business is likely to be lumbered with a lot of debt to start with, which could limit shareholder returns.

Even so, I believe GlaxoSmithKline shares offer good value today as a long-term investment. GSK would be on my shopping list if I was setting up a new portfolio in my Stocks and Shares ISA.

Roland Head owns Legal & General Group and Unilever. The Motley Fool UK has recommended GlaxoSmithKline, Reckitt plc, Tesco, and Unilever. 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 deadline for the Stocks and Shares ISA is fast approaching. That’s why I’m thinking about topping up my allowance to make sure I don’t miss out. I view the ISA as a great way for me to invest for my personal circumstances, so I certainly want to take advantage of it.

Here are two stocks I’d buy before the deadline, and some top-rated stocks and shares ISAs.

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.

A Stocks and Shares ISA investment

I’d first top up my investment in Games Workshop (LSE: GAW), the tabletop gaming company. The share price has come under pressure recently and is down by 24% over one year. I think this represents a buying opportunity. Indeed, the consensus analyst share price target is £132.10, or 80% above today’s share price of £73.30.

Games Workshop benefits from strong barriers to entry, in my view. The company has developed its games, characters, and storylines over decades, which would be hard for a competitor to copy straight away. It’s also leveraging this intellectual property by selling the rights to use these characters to video games developers. Just last week, Sega published the widely-played third instalment of Total War: Warhammer 3, which received positive reviews from critics.

I see further licensing deals as a key growth driver for Games Workshop. It’s also a very high margin business, too.

However, growth rates have stalled recently. This is due to the cyclicality of Games Workshop’s major tabletop releases. Therefore, sales can spike one year, and then growth appears to slow in the following year. It’s a risk to consider before I buy more shares. In addition, competition cannot be ruled out completely, particularly in the highly competitive video game industry.

But on balance, I’d add Games Workshop shares to my portfolio today.

One more stock I’d buy

I would also add to my position in Volex (LSE: VLX). It’s another share price that has been falling lately, and is down by 20% over one year at time of writing.

The company released its half-year results back in November. Revenue grew by over 44% in the 26 weeks ending 3 October 2021 (HY22), which reflected “high levels of customer demand in all sectors”. However, profit margins came under pressure due to the global supply chain disruptions businesses are facing right now. This is a key risk for the company going forward.

A key growth market for Volex is the expanding electric vehicle industry. The company supplies grid-cords for charging purposes, and sales grew 210% in this division in HY22 compared to the same period last year. I see this being an important vertical for the company in the years ahead.

Volex has also completed two acquisitions recently: Prodamex, and Terminal & Cable. Both companies will expand Volex’s geographic coverage of the North American market. One thing to keep in mind though, is that there’s never a guarantee that an acquisition will work out. Indeed, Volex just recently increased its debt facilities to support further acquisitions. Therefore, acquiring businesses is a key part of its strategy, so it’s important to monitor how they integrate into the Group.

Nevertheless, I’ve been pleased with Volex’s acquisitions up to now. I also see strong growth potential for the company. So, I’d add to my position before the Stocks and Shares ISA deadline.

Dan Appleby owns shares of Games Workshop and Volex. The Motley Fool UK has recommended Games Workshop. 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.

On Thursday (24 February), investors can expect a trading statement from Rolls-Royce (LSE: RR). Will the update boost the Rolls-Royce share price, or could it put it under further pressure?

An update to lift the Rolls-Royce share price?

I suspect it could be the latter – so the share price could fall. While more travel in recent months will likely mean an improved full-year performance, it’s still unlikely to change the minds of the bears. That’s because there are still quite a few issues for management to sort through – some of which even pre-date the pandemic.

Banking giant UBS forecasts second-half group sales of £6.3bn at Rolls, which would only be an 8% rise on last year. Hardly a sign of a massive turnaround. It has said it retains “a cautious view on the recovery of long-haul and corporate travel that Rolls-Royce is overexposed to”.

Moving forward?

The latest trading statement would follow December’s update, which showed that free cash outflow in 2021 was expected to be better than its earlier guidance for £2bn. Rolls-Royce said then it expected to have cut 8,500 jobs by the end of 2021. Cash flow and cost savings, therefore, are two themes that will be vitally important in this week’s update, along with a recovery in aerospace. Any of these being below expectations, I think, could see the Rolls-Royce share price fall.

Overall, 2021 was a horrible year for the company, with huge profit warnings – unsurprisingly. There’s a chance for it to build back better this year. This week’s trading statement will be a good indication of how far the engineer has come and where it’s headed.

Exciting new growth opportunities

Taking a longer view, there may be opportunities for Rolls-Royce to grow. The development of modular nuclear reactors holds some promise if progress is made in commissioning them. That’s a particularly exciting new potential growth area for Roll-Royce.

As a leading engineer, with heritage, world class expertise and a strong brand, it may be well positioned to generate sales in other emerging technologies where it could apply its expertise. Given low expectations for the group, new revenue streams could really lift investor expectations and, in turn, the share price. Any announcement along these lines, accompanied by a return to normal for the core business, could see the Rolls-Royce share price do very nicely.

Avoiding the shares

In the short-term then I think there’s a risk this week’s trading statement could see the share price fall. That seems likely if cash flows are lower than expected or Rolls isn’t cutting costs significantly. Also, if the tone on aerospace isn’t positive I think that could be a warning as well. The tone of the UBS note on the firm also makes me cautious on the shares. Then again, if the update is positive then I could be wrong, and the share price could get a short-term boost. But overall as a long-term investor, I’m not convinced Rolls-Royce shares will outperform the market and so I’ll be avoiding the stock.

Andy Ross owns no share 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.

Long-term investing can be difficult to wrap one’s head around at first. It’s not always easy to plan 10, 15 or 20 years in the future. But I believe the potential benefits of this sort far outweigh any other strategy. Especially in times of market uncertainty.

Since the last big crash, thousands of companies across the world have seen their shares grow by double, triple, or even quadruple digits. The past is not a predictor of the future, but it can reveal patterns that savvy investors can either take advantage of or use to keep a clear head.

The poster child of long-term investing

Berkshire-Hathaway is the American conglomerate under the stewardship of famed investor Warren Buffett. Buffett has been at the helm since 1965 and has steered the company through multiple crashes and periods of contraction. However, Berkshire has always managed to stay on top. Between 1965 and today the company’s A-shares have grown from $19 to over $470,000 each. In that time there have been roughly seven market crashes in the U.S.

I can only imagine the horror of those who sold their shares during those crashes. Or those who were put off investing because they weren’t thinking of the long term. The company’s B-shares have grown 452% since 2009 and I see no reason why they can’t see similar growth over the next 10 years. Buffett’s tenure at Berkshire Hathaway will undoubtedly come to a close at some point, but I trust that he and the board have a suitable successor in mind.

Tech is here to stay

Another, more recent example could be Amazon. The Covid-19 pandemic has seen the online retail and media company rocket into the stratosphere, but it’s worth noting that it first debuted on the stock market at $1.97 back in 1997. Amazon was one of the few internet companies to survive the dot-com bubble, but it also held up remarkably well during the 2008 financial crash. At that time, shares were worth just $50 each. How much are they now?

$3,052.

That’s a growth of roughly 5,000% in just over 10 years.

Again, not every company can be Amazon, but the point remains that investors who held onto those shares or even bought them as prices fell have made a small fortune. This is what characterises the risk-reward factor with investing. Yes, there is a risk, but as long as I focus on the long term, do my research, and keep a level head when times are tough, I stand a good chance of coming out on top.

Stock market volatility

There’s not much I can do about the macro factors which affect the stock market. No one can be sure when there will be a pandemic or tensions boil over into war. But I also won’t let fears of these things prevent me from investing. What I can do is work to focus on the long term. I’m certainly not immune to the fears of a market downturn, but so long as I keep my focus on 10 or even 20 years in the future, I know I can weather whatever storms come my way.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Reynolds owns Berkshire Hathaway (B shares). The Motley Fool UK has recommended Amazon. 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.

For many shares in the UK and stocks in the US, shareholders have been seeing falling prices. And the common theme is most of those plunging names had previously been good-performing stocks for investors.

In the UK, I’m talking about companies such as Experian, the global information services business. The stock has plunged by around 31% since the beginning of 2022. But at 2,805p, it’s still up by about 16% over the past year.

Quality businesses with high valuations

And there’s nothing wrong with Experian. The company runs an impressive and growing business and scores well against quality indicators. But the share price had staged a multi-year bull run. And the almost inevitable consequence of that has been a high valuation.

Even now, the forward-looking earnings multiple stands near 27. And that’s when it’s been set against modest double-digit percentage anticipated growth in earnings.

Similar examples include chemicals company Croda International, technology outfit Halma and Spirax-Sarco Engineering, among many others. They are all great businesses with promising prospects. And I’d love to one day have their stocks in my portfolio. But my read of the market is it may not have finished marking down valuations to better fit the potential of a business.

Warren Buffett, for example, likes to buy wonderful businesses when they are selling at fair prices. And that often means he ends up buying stocks during troubled economic times, or when the wider stock market has been crashing.

But I don’t believe Buffett would judge valuations to be low enough to buy the decent companies I’ve mentioned here. Therefore, they are all going on my watchlist waiting for a better entry point, despite the recent share price falls.

Retraces can move a long way

US super-trader Mark Minervini has what he calls a 50/80 rule. He reckons when a leading stock makes a major top, there’s a 50% chance it will drop 80% and an 80% chance it will drop 50%. And the average decline of a former leader is more than 70% peak to trough.

Of course, he’s not talking about the performance of the underlying businesses. In many cases, they can keep growing and performing well whatever the share price is doing. But when valuations become stretched, stocks really can sometimes retrace their gains by scary percentages.

I wouldn’t base my entire investment career on Minervini’s observation. But it is food for thought. And it’s keeping me cautious regarding these fallen leader stocks for the time being. Meanwhile, another piece of market wisdom asserts that the leading stocks of the previous market rally are often replaced by new winners in the next bull run.

Lately, I’ve noticed that stocks scoring well on value attributes have burst into life in many cases. So it looks like we could be seeing a mass investor rotation from high-priced growth and tech stocks into companies with strong value characteristics.

And my guess is the next big bull run will likely be led by such value plays. So with a £2,000 lump sum to invest now, I’d look for stocks scoring well against traditional value indicators.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Croda International, Experian, and Halma. 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 UK’s blue-chip FTSE 100 index includes only 10 companies with market valuations exceeding £50bn. I keep a close eye on these so-called ‘mega-cap’ stocks, not least because they account for close to half of the wider index’s value. What’s more, I often hunt for value by looking for cheap shares among these very large, highly liquid stocks.

The FTSE 100’s 10 Goliaths

For the record, these are the 10 largest shares in the FTSE 100 index:

*PER is price-to-earnings ratio (a stock’s earnings multiple)

I would not buy all 10 FTSE 100 shares

Together, the total market cap of these 10  Goliaths is close to £970bn. That’s almost half (48.5%) of the FTSE 100’s total market cap of £2trn. Thus, these 10 powerhouses have a major influence on the Footsie’s future growth and dividends.

However, if you asked me to create a portfolio based solely on these FTSE 100 giants, I’d politely decline. Why? First, because this hypothetical portfolio would be highly concentrated. Putting 10% into each stock would leave me with weightings of 20% in the energy, pharmaceuticals, mining, and consumer goods categories. Such a highly condensed portfolio would not provide me with enough diversification. In other words, it wouldn’t spread my risk about nearly enough for my liking.

Second, as a veteran value investor, several stocks on this list look far too pricey for my portfolio. I aim to buy shares that trade on low PERs and high earnings yields. Also, as an older investor, I like the passive income generated from owning shares paying juicy dividends. Ideally, I prefer dividend yields well above the FTSE 100’s 4% a year cash yield.

But I would buy Rio Tinto

Of all 10 mega-cap FTSE 100 stocks in the above table, one in particular stands out for me. It is mega-miner Rio Tinto (LSE: RIO), which means ‘red river’ in Spanish. Why do I like Rio Tinto today? First, it is a huge (£94.8bn) group with an easily understood business model. Rio digs up resources — commodities such as metals and minerals — to sell worldwide. It feeds vast quantities of iron ore, aluminium, copper, and lithium into the global economy. With 60 mining projects across 35 countries, this super-heavyweight generates huge cash flows, profits, and earnings.

Second, Rio Tinto’s shares look dirt-cheap to me at current levels. The Anglo-Australian firm’s stock trades on a lowly price-to-earnings ratio of 6.7 and a bumper earnings yield of 14.9%. Also, Rio’s dividend yield of 8.7% is almost five percentage points higher than the FTSE 100’s cash yield. Third, Rio is set to return many billions of pounds to shareholders this year in cash dividends and share buybacks. 

For me, this dirt-cheap dividend dynamo appears to be an outstanding buy today. But 35 years of investing experience has taught me that mining stocks can be extremely volatile. Also, during downturns in commodity cycles, miners’ shares often perform poorly. Nevertheless, I’d happily buy and hold this FTSE 100 behemoth at current share prices!

Cliffdarcy owns shares of GlaxoSmithKline. The Motley Fool UK has recommended British American Tobacco, Diageo, GlaxoSmithKline, HSBC Holdings, and Unilever. 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.

With the Stocks and Shares ISA deadline fast approaching, I’m looking for the best UK shares to buy now for my portfolio. These past couple of months have been quite a bumpy ride in the stock market. But while many businesses have watched their stocks tumble, the long-term potential remains promising, in my opinion.

So, let’s explore three UK shares I think are great buys for my Stocks and Shares ISA £20,000 allowance.

A future leader in digital marketing?

dotDigital (LSE:DOTD) is one of many UK shares I’m keen to buy now. The group provides a cloud-based marketing automation platform. Clients can create and distribute targeted marketing campaigns to existing and prospective customers to boost product sales or service subscriptions.

The stock has taken quite the beating over the last 12 months, falling by around 18%. Yet despite this lacklustre performance, revenues hit a new all-time high and continue to surge annually by double-digits.

This is far from a risk-free business, of course. With scrutiny surrounding data privacy from governments, and companies like Apple limiting data gathering systems, dotDigital’s platform may start losing its data-driven edge.

However, with a track record of successfully adapting to such restrictions in the past, such as GDPR, I believe the company can do so again.

One of the best UK shares to buy now?

Judges Scientific (LSE:JDG) shares have experienced quite a tumble in recent months. While the stock is still up by around 9% in a year, since the start of 2022, it’s actually down by nearly 15%.

This business is a designer and manufacturer of scientific instruments used throughout countless industries and applications, from testing electric car batteries to running experiments at CERN.

While it’s undoubtedly quite a niche field, the group’s impressive track record of acquisitions has made it arguably a leader within its space. And excluding 2020, profits have been growing by an average of 66% annually since 2017!

But like all businesses, there are risks. With many of its customers being supported by government subsidies, budgets are largely at the mercy of local economic health. Needless to say, the pandemic hasn’t exactly created the best environment for that.

Future economic downturns will remain an ever-present threat to this business. But with an established portfolio of brands, I remain confident that Judges Scientific is one of the best UK shares to buy now for my Stocks and Shares ISA.

Becoming Amazon’s landlord

With e-commerce adoption being accelerated courtesy of global lockdowns, the demand for high-quality well-connected warehouse space has skyrocketed. That’s proven to be quite a favourable tailwind for Warehouse REIT (LSE:WHR), and it’s why it’s one of my best UK shares to buy for my portfolio.

The business model is pretty simple. It buys dilapidated well-positioned properties, spruces them up, and then rents them out at a higher price to e-commerce businesses like Amazon. The profits are then returned to shareholders through a sizeable 4% dividend yield.

It does face some serious competition. And with relatively low barriers to entry, competitors could start heating up bidding wars for new locations. But given its consistent track record of performance, I think this stock could be an excellent addition to my portfolio.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Zaven Boyrazian owns dotDigital Group. The Motley Fool UK has recommended Amazon, Apple, Judges Scientific, Warehouse REIT, and dotDigital Group. 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.