Today has seen dramatic movements on stock markets, with some shares tumbling. Evraz is down 31% and Ferrexpo 35%, but even less exotic shares have suffered albeit on a smaller scale. In this volatile market, I see plenty of UK shares to buy now for my portfolio and hold for the coming years.
If I wanted to put £20,000 into the UK stock market right now, I would spread it evenly across five growth-focussed picks and five income-earners.
Growth on sale
I reckon a number of companies with solid growth opportunities offer attractive prices currently. These include digital media agency group S4 Capital, trading lower than a year ago despite booming revenue. Growth could add costs that hurt profitability, though. I have also been buying boohoo, down almost 80% in a year. The growing, profitable online retailer is seeing inflation eat into profits, but I like its long-term prospects.
After it has headed back to penny share territory today I would also add Rolls-Royce to my portfolio. Subdued demand for civil aviation could hurt profits in the short term. But for now at least, the company has returned to profit – and I expect aviation demand to grow strongly in the next decade.
Mirror publisher Reach has lost half its value since August and is down 8% over the past year. But the group’s revenue has actually been growing, modestly. That is driven by strong growth in its digital platforms, which I think could continue in coming years. One risk is declining profit margins as digital is often less profitable than print media.
My final growth choice would be JD Sports. The company’s most recent results were its best ever, yet the shares fell 11% over the past year. I see continued opportunities for strong growth overseas, with a risk that local competitors could push down profit margins.
Dividend shares to buy now
Turning to income, I would buy both Imperial Brands and British American Tobacco. Declining cigarette volumes threaten both revenues and profits, but the companies have shown the power of their brands to support price increases. They are also building new revenue streams. Right now they yield 6.6% and 8.3% respectively.
I would also pick two financial services shares. Asset manager M&G, with its yield of 8.9%, would hopefully earn me around £178 per year in dividends for my £2,000 investment. Volatile markets could lead clients to withdraw funds, hurting profits. But the company’s large size and established reputation give me confidence for the long term. I would also buy insurer Direct Line for its 7.7% yield. Payouts for storms could hurt profits. But in the long term I think the company’s brand and the attractive economics of the insurance market should help it prosper.
Finally I would buy Income and Growth Venture Capital Trust. The trust invests in early stage companies, so backing the wrong ones could hurt profits. But as the yield shows, the trust has spotted some real winners. Its dividend tends to move around, but the current 9.6% yield looks tasty to me.
UK shares to buy now
Investing £2,000 in each of these 10 shares would hopefully earn me almost £900 a year in dividend income as well as exposing me to some interesting growth stories. Why panic in turbulent markets? I would rather take the opportunity to invest now and hopefully reap the rewards for years to come.
Should you invest £1,000 in Rolls-Royce right now?
Before you consider Rolls-Royce, you’ll want to hear this.
Motley Fool UK’s Director of Investing Mark Rogers has just revealed what he believes could be the 6 best shares for investors to buy right now… and Rolls-Royce wasn’t one of them.
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Christopher Ruane owns shares in British American Tobacco, Imperial Brands, JD Sports and boohoo group. The Motley Fool UK has recommended British American Tobacco, Imperial Brands, S4 Capital and boohoo 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.
