Baby Boomer Investors Favour ISA Income Stocks

Baby-boomer investors have chosen dividend stocks for their ISA portfolio, where millennials opt for high growth equities

David Brenchley 6 March, 2018 | 2:36PM
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Vodafone was one of the baby boomers top ISA stock picks

Millennials look for “quick wins” for their ISA portfolio, while the baby-boomer generation investing for income, according to data from The Share Centre.

Millennials’ investments made through the platform were “highly geared for growth”, says Helal Miah, investment research analyst at The Share Centre.

Baby boomers, meanwhile, are much more income-oriented with nine of their top 10 most popular picks yielding more than 3%. This is not surprising given most of this generation are considering or approaching retirement age, says Miah.

With the end of the tax year closing in, Morningstar asked The Share Centre which stocks millennials, aged 18-36, and baby boomers, aged 60 plus, had invested in since April 6 2017.

Millennials’ Stock Picks

The energy and mining sector was a big focus for the younger generation, who potentially have a time horizon of at least 25 years to generate growth in their portfolios. These smaller companies have the possibility of giving them a “quick win” as Miah defines it.

Half of the millennials’ best buy list have market values of less than £100 million, with 88 Energy (88E) and UK Oil & Gas (UKOG) the two most-purchased companies. The pair’s fortunes have differed in the timeframe, with the former down 42% and the latter up 47%.

However, 88 Energy did manage to climb 43% by mid-June 2017. UKOG – which owns the Horse Hill Development in Surrey, known as the Gatwick Gusher – at one point soared 650% - a quick win if you’d timed it right – before spectacularly falling back to earth.

Gold miner Greatland Gold (GGP), the fourth most purchased, had similar fortunes. Though its share price currently remains twice as much as it did in May, it had risen almost ninefold by January this year.

Other small resource firms in the list include Echo Energy (ECHO) and Ascent Resources (AST). But it’s not just the minor outfits. FTSE 250-listed potash miner Sirius Minerals (SXX) also makes an appearance.

Elsewhere, the £2 billion online retailer (BOO), which has shot the lights out since listing in mid-2014 takes its place. As does chipmaker IQE (IQE), one of the most-shorted UK stocks.

Two additions to millennials’ portfolios which bucked the high growth trend were dividend-paying blue chips Lloyds (LLOY) and GlaxoSmithKline (GSK).

Baby Boomers’ Stock Picks

The last two equities featured on the millennials’ top 10 list were the two most popular investments for the baby boomers. Lloyds currently yields around 4%, but is predicted to pay out more in the near future; while drug maker Glaxo pays out more than 6%.

Utilities National Grid (NG.) and United Utilities (UU.) both yield in excess of 5.5% and take their place, while oil majors – paying more than 6% – are  fourth and fifth most bought stocks.

Telecoms specialist Vodafone (VOD) and brewer Marston’s (MARS) yield 5.8% and 7% respectively while consumer goods behemoth Unilever (ULVR) is at a more modest 3.23%, but is part of the bond proxy group of shares, meaning its pays a perceived stable dividend.

The one surprise name in the baby boomers’ list was UKOG, the oil and gas developer that saw exponential share price growth at one point, but is now almost back at square one.

“With the exception of UK Oil & Gas, these are companies that are less speculative and well-established names that provide baby boomers with stability and a relatively steady stream of capital,” says Miah.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
88 Energy Ltd0.14 GBX-4.44
Ascent Resources PLC1.88 GBX1.62
Boohoo Group PLC34.52 GBX0.35
Echo Energy PLC0.00 GBX0.00
Greatland Gold PLC7.33 GBX0.14
GSK PLC1,774.50 GBX-0.20Rating
IQE PLC34.00 GBX0.74
Lloyds Banking Group PLC54.80 GBX-1.76Rating
Marston's PLC36.50 GBX-4.45
National Grid PLC889.40 GBX-11.50Rating
UK Oil & Gas PLC0.03 GBX2.00
Unilever PLC4,296.00 GBX-0.37Rating
United Utilities Group PLC Class A1,007.50 GBX-1.61Rating
Vodafone Group PLC73.50 GBX-0.92Rating

About Author

David Brenchley

David Brenchley  is a Reporter for

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